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From Antitrust Law Daily, July 3, 2014

Amazon vows to fight FTC allegations based on kids’ in-app purchases

By Jeffrey May, J.D.

Amazon.com, Inc. is facing an FTC court action over its purported practice of billing consumers for charges incurred by children within mobile applications without informed parental consent. The tech giant is resisting pressure from the agency to agree to a settlement like the one imposed on Apple Inc. earlier this year for engaging in similar conduct.

Amazon takes issue with the allegations that the company failed to get customers’ informed consent to in-app charges made by children and did not address the problem quickly or effectively in response to customer complaints, according to a July 1 letter from Andrew C. DeVore, an Associate General Counsel at Amazon, to FTC Chairwoman Edith Ramirez. The company contends that its approach was “responsible, customer-focused, and lawful.” The company provided “prominent notice of in-app purchasing, effective parental controls, real-time notice of every in-app purchase, and world-class customer service,” as well as refunds to customers for unwanted purchases. Amazon also touted its development of parental controls, such as Kindle Free Time, which enables parents to restrict or filter content available to children.

Talks between Amazon and the agency, “focusing on Amazon's customer-centric approach to in-app purchasing,” follow a recent FTC consent order requiring Apple to change its billing practices to ensure that express, informed consent from consumers has been obtained before charging them for items sold in mobile applications. Apple also agreed to provide full refunds to consumers for unauthorized in-app purchases by children, totaling a minimum of $32.5 million.

Amazon expressed concern with the “Commission's unwillingness to depart from the precedent it set with Apple despite our very different facts.”

“Pursuing litigation against a company whose practices were lawful from the outset and that already meet or exceed the requirements of the Apple consent order makes no sense, and is an unfortunate misallocation of the Commission’s resources,” the letter states.

Companies: Amazon.com, Inc.; Apple Inc.

MainStory: TopStory ConsumerProtection FederalTradeCommissionNews

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