Amazon Comes Under FTC Fire

By Steve Anderson July 10, 2014

Microtransactions are a field that's still somewhat new, but giving a lot of app makers a whole new hope in terms of taking an app from nothing to profitable. A new breed of game, the “free-to-play” game, has sprung up around the concept that, if the game exists, people will pay in order to have better access to certain parts of the game once it's been played for some time at no charge. But a new report from the Federal Trade Commission (FTC) suggests this particular field may have gone too far for online retailer Amazon.

The FTC complaint notes that Amazon has billed account holders for “millions of dollars in unauthorized in-app charges incurred by children,” a phenomenon that has been seen before with places like Apple's iTunes. The FTC further noted that, due to the way Amazon's in-app billing system was set up, users were allowed to “incur unlimited charges...without permission.” Since there was no kind of password protection or anything similar on charges, once logged into the system using the standard password protections, users could then proceed to make payments in the apps without further need for authentication. So in this case, once a parent logged in to allow a child to play a free-to-play game or use a similar app, the child could then make payments for in-game material—which runs the gamut from things like “stars”, “acorns” and even “Smurfberries”—for which the parents were left to pick up the tab. In response, the FTC is seeking not only a refund for the charges in question, but also a permanent ban on billing for charges made in apps without consent.

Perhaps worse is how easy it was for the children in question to cause such payments to occur without even knowing such a thing would happen. It was perhaps bad enough that the children could buy a load of Smurfberries or the like, but worse was how a youngster unable to even read still managed to “click a lot of buttons at random” and in turn be charged for the purchases. However, Amazon had already made some changes to its system that required informed consent as far back as early 2013 by some reports, though in June 2014, it made a change once again to require such informed consent on its newest devices.

While microtransactions have proven to be quite helpful for game makers, allowing a means to get a game developed and in users' hands while still allowing for a means to make a profit, we've also seen how microtransactions can come back to haunt developers, as was the case for some time. In this case, however, the FTC's efforts seem oddly punitive; most of the changes desired have already been made, and in some cases refunds have likely also been issued, though the FTC's complaint does note that the Amazon statements “...suggest consumers cannot get a refund for these charges,” in addition to an overall refund process that is “...unclear and confusing.” It's an issue that does need to be addressed, but it seems like the market is making many of these adjustments itself.

It's likely we'll find out how the whole issue ultimately shakes down fairly soon, and hopefully, when complete there will be a reasonable solution that protects users from unauthorized charges. It's a reasonable enough hope to have, and one that will allow microtransactions to continue to be part of the app landscape, giving us all access to more and better quality apps.

Edited by Maurice Nagle

Contributing TechZone360 Writer

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