The recent settlement of the FTC’s enforcement action against Amazon for unauthorized billing leaves two key conclusions: 1) consumers are eligible for more than $70 million in refunds; 2) businesses were charged before charging their credit or debit cards. Explicit consent from the customer is required.
Last year, a federal judge in Seattle ruled in favor of the Federal Trade Commission in a lawsuit against Amazon for charging consumers unauthorized in-app fees from children. Child-focused apps available on the Amazon App Store prompt children to purchase virtual currency, such as “A Boatload of Donuts.” But for the parents stuck with the bill, it’s more like a chunk of money — millions of dollars in unexpected expenses they don’t agree with.
The court found that Amazon violated the Federal Trade Commission Act by charging parents real costs for virtual goods in children’s apps without their consent. The FTC has settled similar cases with Apple and Google.
The next chapter in the story is ensuring that people harmed by Amazon’s illegal practices get their money back. Under the terms of the settlement, Amazon will provide more than $70 million in refunds to customers who were charged for unauthorized in-app purchases by children.
Amazon may owe you a refund if:
- you were charged a fee for a child without your authorization, and
- These charges are for in-app purchases made between November 2011 and May 2016.
The refund process is simple. If you qualify, you should have received an email from Amazon. If you think Amazon owes you money but you haven’t received an email yet, there are two ways to learn more:
- Go to https://www.amazon.com/gp/mas/refund-orders/in-apprefund/ or
- Sign in to your Amazon.com account and go to Message Center.If you qualify, you can find more information below Important news.
The refund request process is conducted online only, and consumers do not need to send anything via email to submit a refund request.The deadline for requesting a refund is May 28, 2018. Consumers can call Amazon: 866-216-1072 If they have questions.
The Amazon case also provides businesses with a compliant currency. Most importantly, as the judge noted, “Courts have repeatedly held that billing customers without permission for purposes of bringing claims under Section 5 of the FTC Act causes harm.” Prudent Businesses Be Cautious Explain the nature of the transaction upfront and obtain the customer’s express consent before charging the customer’s account.
Companies that use payment methods other than U.S. dollars should pay special attention to this principle. As the court held, “Many of Amazon’s arguments improperly assume that consumers are familiar with in-app purchases.” It would be unwise for the company to simply assume that people understand how the new payment mechanism works. Clearer explanations from the outset can reduce the risk of confrontation with the client and violation of the law.
Furthermore, the case represents the established proposition that if disclosure is necessary to prevent a conduct from being deceptive or unfair, the disclosure must be clear and conspicuous. Amazon argued that a small hyperlink that simply said “In-App Purchase” was enough to alert consumers that they would be charged an in-app fee. The court ruled not to be the case.
If your company is looking for more guidance, see .com Disclosure: How to Create Effective Disclosure in Digital Advertising.
