The issue began in 2014, when the Federal Trade Commission (FTC) told Amazon that if it “didn’t adopt a more Apple-like policy about in-app purchases, it might wind up in court,” Engadget reported. This did indeed happen, as the FTC requested a court order to require Amazon to issue refunds to parents who did not authorize their children’s’ app purchases. Fast forward to April 2016, when a judge found Amazon liable for the purchases, but had not yet decided upon a method for the company to pay them back.
Now on Thursday (six months after finding Amazon liable), U.S. District Judge John Coughenour directed the company to set up a “year-long process to reimburse parents whose children made in-app purchases without permission, but rejected a U.S. regulator’s request for a $26.5 million lump-sum payout,” Reuters reported.
Coughenour had also declined the company’s offer to reimburse parents through gift cards, because the money would flow back to the company, saying to Reuters that Amazon would “undoubtedly recapture some of the profits that are at issue,”
Amazon will now set up a notice-and-claims process next year to inform those who are eligible for money back.
Speaking on his decision, Coughenour said that the approach “removes the uncertainty of the proper lump sum amount that the parties have vigorously disputed. Moreover, it accomplishes the goals of placing liability on Amazon and refunding eligible customers.”
According to Reuters, the unauthorized charges claimed in the original suit added up to an estimated $86 million.
Amazon, along with Apple and Alphabet Inc. have put in place measures including password and security controls to prevent unauthorized charges in the future, as the latter companies had faced FTC settlements in 2014 as well.
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