Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Google to refund $19M for kids’ unauthorized in-app purchases, (Sep 4, 2014)

By Greg Hammond, J.D.

Google Inc. has settled FTC charges that the company violated the FTC Act’s prohibition on unfair commercial practices, by billing consumers millions of dollars in unauthorized charges by children who made a number of in-app purchases on Android mobile devices. The company has agreed to remit at least $19 million in refunds to consumers subjected to the allegedly unfair billing practices (In the Matter of Google Inc., File No. 122 3237).

In its complaint, the Commission alleged that Google began billing for in-app purchases in March 2011, without any password requirement or other method to ensure account holder authorization. Despite receiving complaints from consumers about being billed for unauthorized charges by children, the company purportedly took no steps to require account holder involvement until mid-to-late 2012. In addition, the Commission asserted that Google sometimes required a password to authorize in-app purchases, but entering the password once begins a thirty-minute window, during which in-app purchases may be made without any additional action by the account holder. “As a result, parents and other Google account holders have suffered significant monetary injury, with many thousands of consumers complaining about unauthorized in-app charges by children, and many consumers reporting hundreds of dollars in such charges,” the FTC alleged.

“For millions of American families, smartphones and tablets have become a part of their daily lives,” stated FTC Chairwoman Edith Ramirez. “As more Americans embrace mobile technology, it’s vital to remind companies that time-tested consumer protections still apply, including that consumers should not be charged for purchases they did not authorize.”

According to the consent order, Google will be required to provide prompt refunds to account holders for the full purchase price of any eligible in-app charges. In order to comply with the order, Google must send notice to all account holders who have made any in-app purchases, disclosing that refunds are available for those billed for unauthorized in-app purchases incurred by minors. The company must refund at least $19 million for eligible in-app charges.

In addition to the refunds, Google will be prohibited from billing an account for any in-app charges without first obtaining the express, informed consent of the account holder. If the company allows consumers to consent to future charges for in-app activities, it must also allow them to revoke that consent at any time.

The charges against Google mark the Commission’s third case regarding unauthorized in-app charges by children. The FTC reached a similar settlement with Apple Inc. in January, requiring refunds in the amount of at least $32.5 million, and requiring the company to obtain the express, informed consent of account holders for in-app purchases (In the Matter of Apple Inc., File No. 122 3108, Docket No. C-4444). The Commission also filed a complaint against Amazon.com, Inc. in July, also seeking refunds for consumers and requiring informed consent for in-app purchases (FTC v. Amazon.com, Inc. File No. 122 3238, Case No. 2:14-cv-01038).

Attorneys: Corey W. Roush, Logan M. Breed, Wesley G. Carson (Hogan Lovells US LLP) for Google Inc. Duane C. Pozza, Jason M. Adler, and Teresa N. Kosmidis, Federal Trade Commission.

Companies: Google Inc.

News: ConsumerProtection FederalTradeCommissionNews