Judge: $26M Ruling On Amazon’s In-App Charges Too High

It appears that Amazon has gotten to make a return of its own — in the form of an initial penalty recommended by the FTC.

The Hill reports that the Federal Trade Commission, pursuant to its findings that Amazon was liable for unauthorized in-app purchases made by children, recommended that the eCommerce giant pay more than $26 million in damages, but a federal judge ruled that the amount was excessive.

This bit of information — along with others from Judge John Coughenour’s ruling that was made last week — was, the outlet notes, initially redacted, but a number of news outlets were able to view those details with a little copying-and-pasting to a new document.

After this information was inadvertently revealed, Amazon lawyers wrote a court filing that included the statement: “On April 27, 2016, Amazon notified the court that certain third parties were able to identify from the redacted order the text intended by the court to be maintained under seal, and the court subsequently removed that order from the docket.”

Also among the redactions, The Hill shares, was the FTC’s estimate that in-app purchases that did not require a confirmation password had, up until 2014, brought Amazon about $86.5 million in revenue — charges that the commission had deemed to be “high-risk” for children — as well as the fact that the FTC had noted that Amazon had provided refunds in excess of $10 million related to those transactions during the same time period in question.

As for how the FTC hit upon the figure of $26 million, the outlet goes on to explain that the proposed damages were calculated based on the rate at which Amazon app users enter a password incorrectly. That number — 42.03 percent — was alleged by the FTC to serve as a “reasonable proxy for the rate at which children would incur an in-app charge without consent.”

The judge disagreed, ruling that the rate was “too inflated to be used in determining final money damages.”

The Hill adds that Judge Coughenour requested more information from Amazon and the FTC in order to determine an adjusted amount of damages in the coming months.


Exclusive PYMNTS Study: 

The Future Of Unattended Retail Report: Vending As The New Contextual Commerce, a PYMNTS and USA Technologies collaboration, details the findings from a survey of 2,325 U.S. consumers about their experiences with shopping via unattended retail channels and their interest in using them going forward.

Click to comment