Big spenders: The FTC blames Amazon for sales to children

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The Federal Trade Commission has run out of patience with Amazon. The government agency sued the online retail giant in Seattle last week for failing to install sufficient protections against online purchases made by children without their parents’ consent.

The lack of passwords to prevent children from easily accessing Amazon game apps on its Kindle tablet has resulted in parents becoming liable for “many millions of dollars” of charges, the FTC said.

Using internal company emails to prove its point, the FTC argued that Amazon ignored the vulnerability in its system of so-called in-app purchases. The agency said that before a child is even aware of it, hundreds of dollars in spending can be racked up on a parent’s credit card.

Amazon insists that its practices are legal and that the FTC is focusing on what it considers a minor problem. The online retailer said it has refunded money to parents who complain and that, although a password was not needed to make any purchase up to $99 when it began in-app charges in 2011, it did begin requiring a password in 2012 for charges over $20.

The FTC wants Amazon to pay millions of dollars in refunds since 2011, when it began marketing heavily to children. Far from discouraging online innovation, the suit merely seeks to hold the company responsible for bad business practice.

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