(New throughout, adds details on apps and in-app purchases)
By Diane Bartz
WASHINGTON, July 10 The U.S. government sued
Amazon.com on Thursday for allowing children to
collectively run up millions of dollars in purchases on the
credit cards of their unsuspecting parents while playing mobile
apps like "Tap Zoo" and "Ice Age Village."
The lawsuit, filed by the Federal Trade Commission, seeks to
make the online retailer refund money spent without parental
permission and to end Amazon's practice of allowing purchases
without requiring a password or other mechanism that gives
parents control over their accounts.
The unauthorized charges are often associated with
children's apps, such as games, that can be free to download but
allow players to make in-app purchases by buying "coins" or
other digital products with the credit card associated with the
device, the FTC said in its complaint.
The FTC complaint cited "Tap Zoo" and "Ice Age Village" in
which children manage a zoo or an ancient town. To do that, they
can purchase digital items that often cost real money.
A user put a review on Amazon.com in July 2013 complaining
that "Tap Zoo" was a "cash trap" and said his son spent $65 on
it without permission. The game currently tells parents how to
disable the purchasing function.
The apps run on Amazon's Kindle Fire, Kindle Fire HD and
devices that use Google's Android operating system.
The FTC settled a similar case with Apple Inc in
January. Apple agreed to refund to customers at least $32.5
million in unauthorized charges made by children and to change
its billing practices to require consent from parents for in-app
Amazon declined comment, and referred reporters to a letter
that its vice president and associate general counsel, Andrew
DeVore, wrote to FTC Chairwoman Edith Ramirez dated July 1.
In the letter, DeVore protested the FTC's threat to file a
lawsuit against the company if it did not agree to a consent
order along the lines of the one reached with Apple in January.
DeVore also said the FTC threat to sue "leaves us no choice
but to defend our approach in court."
The FTC said in its lawsuit that Amazon responded to
complaints about unauthorized charges by requiring passwords for
large purchases in 2012. That was extended to all purchases in
2013, but once a password has been entered, a purchase window
remains open for up to an hour, meaning that further charges
could be made without parents' knowledge, the complaint said.
The complaint quotes an Amazon official as saying shortly
after the program began: "We believe that parents are excluded
from the buying process for these apps."
Some parents said their children spent hundreds of dollars
without their knowledge, the complaint said. Amazon bills for
the in-app purchases and keeps 30 percent of the charges, the
Amazon.com shares were down 0.7 percent at $327.48 in
afternoon U.S. trading.
(Additional reporting by Deepa Seetharaman; Editing by Ros
Krasny, Bill Trott and David Gregorio)