Judge Refuses To Dismiss FTC Case Against Amazon
- by Wendy Davis @wendyndavis, December 3, 2014
The Federal Trade Commission can proceed with a lawsuit accusing Amazon of unfairly charging parents for their children's in-app purchases, a judge in Seattle said this week. U.S. District Court Judge John Coughenor rejected Amazon's argument that the FTC was seeking to hold the company to a “new and unjustified” standard of unfair billing. “The Court finds that the FTC does not bring this suit under a new legal principle, and that it alleges sufficient facts to create a plausible claim for relief,” Coughenor wrote an order denying Amazon's motion to dismiss the lawsuit at an early stage.
The courtroom battle dates to July, when the FTC sued Amazon for allegedly allowing children to make in-app purchases without their parents' consent.
When Amazon initially launched its app store, in November 2011, the company allowed children to make purchases without entering a password, according to the FTC. Amazon later began requiring passwords, but only for charges of more than $20, the FTC alleged.
The agency said in its complaint that these practices resulted in bills to parents for unauthorized in-app purchases by their children. The FTC is seeking a court order requiring Amazon to reimburse parents for any charges that were incurred without their consent.
Amazon argued in court papers that it notified parents about the possibility of in-app purchases. The company also said that parents could have mitigated damages by blocking purchases with parental controls, or seeking refunds.
Coughenor said that those arguments weren't grounds to dismiss the case at an early stage, given that much of the evidence hasn't yet come out in court.
“It appears plausible that many Amazon customers may not have known about in-app purchases, did not know a refund was possible, or were dissuaded by the complexity of the process from seeking a refund,” Coughenor wrote. “This is sufficient to survive a motion to dismiss.”
Earlier this year, Apple and Google agreed to provide refunds to parents in order to settle similar allegations by the FTC. Google also is facing a potential class-action lawsuit by a parent who said that her two young sons purchased $65.95 worth of in-game currency shortly after she downloaded the 99-cent app “Run Jump Smash.”
