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Amazon says it will fight FTC on in-app purchases made by children

E-Commerce IndustryConsumersNewspaper and MagazineApple iTunes
Amazon is resisting a a request by the FTC to set stricter controls on in-app purchases made by children
Amazon is facing a potential lawsuit by the FTC over in-app purchases by children

Amazon.com is resisting a request by the Federal Trade Commission to set stricter controls on in-app purchases made by children.

The Seattle company is facing a potential lawsuit by the FTC on the matter and is prepared to go to court to defend itself, according to the Wall Street Journal, which cited a proposed complaint as well as a letter from Amazon to the FTC.

In the letter, Amazon vowed to stand by its current practices in court "rather than agree to fines and additional record keeping and disclosure requirements over the next 20 years," the Journal said.

Increasingly, many apps allow users to buy various virtual goods once they've been installed on a smartphone or tablet.

Amazon maintains that its app store already includes a "prominent notice of in-app purchasing, effective parental controls and real-time notice of every in-app purchase," according to its letter to the FTC.

But the FTC wants Amazon to make its notices more prominent, require passwords for all in-app purchases and make it easier for consumers to obtain refunds, the Journal said. The agency also said thousands of parents and other consumers have complained about unauthorized in-app charges by their children. Many were made on Amazon Fire tablets.

In January, Apple agreed to settle a similar complaint, which focused on how Apple notified parents about in-app purchases.

Apple agreed to make changes to its notification process as well as pay at least $32.5 million in customer refunds. 

At the time, in order to make an in-app purchase, Apple required a user to reenter his or her iTunes password for final approval.

At that point a child would have to hand the device to a parent to enter the password. What wasn't clear to many parents was that after entering their password, they were opening a window that would allow children to make additional purchases for the next 15 minutes before the password expired.

In some cases, parents said their children went on to make thousands of dollars' of additional purchases in those windows without their approval.

Under the terms of the settlement, Apple had to take steps to notify parents about the 15-minute window, but the company didn't necessarily have to eliminate the window.

In addition, Apple was required to provide full refunds to consumers who were affected.

Follow Andrea Chang on Twitter.

Copyright © 2014, Los Angeles Times
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