Google To Refund $19 Million For Children's In-App Purchases

Google will refund at least $19 million in order to settle “family fraud” charges that it unfairly billed parents for their children's in-app purchases, the Federal Trade Commission announced on Thursday.

“This action marks an important step in the FTC’s continuing work to ensure that consumers using their mobile devices enjoy the same basic consumer protections that have existed for decades in other contexts,” FTC Chair Edith Ramirez said in a statement about the case. “Our settlement with Google underscores the fundamental principle that consumers should never be charged for a good or service without their consent.”

The FTC alleged that, starting in 2011, Google let young children make in-app purchases in games without first entering passwords. The following year, Google began requiring passwords, but allowed kids to rack up in-game charges for 30 minutes after the password was entered, according to the complaint, which also was unveiled on Thursday.

Many of the games at issue “blur the line” between virtual currency and actual money, the FTC alleged. For example, the app Air Penguins -- which lets children save cartoon penguins from melting ice caps -- offers some items (penguins and polar bears) for virtual currency, but charges real money for other items. (Fish sells for up to $49.99.) “The screen does not contain any dollar signs or other description of the real-money cost of any of the items,” the FTC alleges.

The credit card charges prompted thousands of complaints by parents, with many assuming that they had been hacked, according to the FTC. Google employees allegedly referred to these complaints as “friendly fraud” and “family fraud” -- meaning unauthorized purchases by people the account holder knows.

In addition to issuing refunds, Google promised to revise its billing practices.

The company still faces a potential class-action lawsuit brought by New York resident Ilama Imber-Gluck, who says the company allowed her 4- and 5-year-old sons to ring up unauthorized debit card charges within the Marvel children's app “Run Jump Smash.”

The FTC's settlement with Google follows a similar deal with Apple, which agreed to refund $32.5 million to parents for their children's in-app purchases.

The agency also recently sued Amazon over in-app purchases. That case is pending in front of U.S. District Court Judge Marsha Pechman in Seattle.

Rep. Ed Markey (D-Mass.), who requested in 2011 that the FTC investigate in-app purchases, praised the agency for pursuing the issue. “As the use of mobile apps becomes ubiquitous in our digital economy, I encourage the Commission to continue to monitor these applications, especially those targeted to children,” he said Thursday in a statement.

"Kids with tablet" photo from Shutterstock.


2 comments about "Google To Refund $19 Million For Children's In-App Purchases".
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  1. Genesis Toralba from ASU, September 5, 2014 at 4:38 a.m.

    First of all, though the parents might want to complain that their children are buying these apps without their authorization, my thoughts are that the ones responsible for these actions in the first place are in fact, the parents. A four or five year old child doesn’t know what he or she is doing when given a device capable of many things. Even as an adult, we sometimes make a mistake of purchasing something we didn’t intend to, so what can we expect from children? The parents of these children shouldn’t be giving them the phone/tablet that is capable of purchasing these apps, because the way I see it, as soon as parents hand the devise to their children, they are giving them the authorization to buy whatever they want, especially if they leave their account open. There are other kinds of play phones/tablets/etc. specifically designed for children, where they can have games, and the only cost will be of the certain device that will hold the games, without any risk of the child purchasing apps unintentionally.
    Though it is good for Google and Apple to take some part of the responsibility, it is also in the parents hands to make sure that if they are going to continue to give their children access to a device in which it is possible for them to download apps, then the parents should also take the responsibility and check if they are leaving their app store account open, and make sure they close it before handing the devise to the child.

  2. Krista Niess from MKT, September 8, 2014 at 7:26 p.m.

    In-App purchases cannot only happen to children but adults can be victims of this as well, when something pops up in an app indicating an opportunity for more “lives”, extra “money” that is a way for the app to earn more of a profit. Security should be a number one priority for both the company that is securing the payment information for their users; and parents should be careful of putting their payment information on app stores and leaving it logged in. Google along with Apple need to make it more secure so that it is not as easy as one click to purchase something, a password protection needs to be required. I believe that Google needs to make this more secure and have more regulations for the ones creating the apps. Parents should also be checking the apps their children are using, you can’t put the blame all on one party not only does Google need to take responsibilities but the parents need to be more aware of the activities their children are doing on mobile devices with apps. It is very important for the revision for the billing practices, so in the future Google isn’t loosing out on millions of dollars from complaints like “family fraud”. Thank you for this interesting article, I will now be more aware of pop up’s on apps directing me to pay money for things; although I am not a child I have fallen for this “trap” many times.

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