Amazon.com Inc said on Wednesday that it is prepared to go to court against the US Federal Trade Commission to defend itself against charges that it has not done enough to prevent children from making unauthorized in-app purchases.
The commission alleged in a draft lawsuit released by Amazon that unauthorized charges by children on Amazon tablets have amounted to millions of US dollars.
Seattle-based Amazon said in a letter on Tuesday to commission Chairwoman Edith Ramirez that it had already refunded money to parents who complained.
It also said its parental controls go beyond what the commission required from Apple when it imposed a US$32.5 million fine on the company in January over a similar matter.
Amazon’s Kindle Free Time app can limit how much time children spend on Kindle tablets as well as require a personal identification number for in-app purchases, Amazon spokesman Craig Berman said.
“Parents can say — at any time, for every purchase that’s made — that a PIN is required,” he said.
By not agreeing to a settlement with the commission, the company faces a potential lawsuit by the commission in federal district court.
The commission would not comment on whether it is investigating Amazon’s in-app purchase policies, but said in a statement:
“The commission is focused on ensuring that companies comply with the fundamental principle that consumers should not be made to pay for something they did not authorize,” it said.
In the commission’s draft complaint, it said that after Amazon began billing for in-app purchases in November 2011, an Amazon Appstore manager described the level of complaints about unauthorized purchases by children as at “near house on fire” levels.
It said Amazon began requiring password entry for in-app charges above US$20 in March 2012, and then for all purchases early last year. However, for smaller purchases, entering a password once left open a billing window of 15 minutes-to-an-hour in which new charges would not require a password, the commission said in the complaint.
Prompts from kid-targeted games like Pet Shop Story would sometimes not give a price for purchases, the commission said. Sometimes the purchase prompts from games like Tap Zoo were easily mistaken for those using “coins,” “stars” and other virtual currency, it said.