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FTC files lawsuit against Amazon, calls for refund of unauthorized in-app purchases

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One week after Amazon's statement that the company is prepared to fight the Federal Trade Commission in court over its in-app purchase system, the FTC filed a lawsuit against the online retail giant insisting it refund parents for purchases without their consent.

According to the FTC's complaint and a post on its website, Amazon has billed parents for millions of dollars' worth of unauthorized in-app purchases made by children, purchases that it feels were facilitated by Amazon's loose account login process. The complaint also says Amazon keeps 30 percent of these charges.

The lawsuit includes a court order that Amazon refund these bills as well as a request that Amazon work to prevent its account holders from having purchases made without their consent — tighter parental controls and more prominent alerts on apps with microtransactions.

Furthermore, the FTC complaint alleges that in Nov. 2011, when the Amazon Appstore launched, there were no password requirements to complete in-app purchases, and children's games often encourage players to buy virtual items and makes it unclear what requires real-world money. Amazon's purchasing platform was redone in 2013, but not enough to prevent the continued unauthorized purchases. The complaint also chronicles internal Amazon communications as far back as Dec. 2011, in which Amazon's employees were aware that their in-app buying system was "clearly causing problems for a large percentage of our customers."

"Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission," FTC chairwoman Edith Ramirez said in a statement. "Even Amazon's own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

Last week, Amazon sent the FTC a letter stating it was prepared to fight back in court regarding a settlement over unauthorized in-app purchases. The company wrote that it felt its system to prevent children from making purchases without parental consent is already sufficient, and that it would not be making a settlement with the FTC similar to that between it and Apple earlier this year.