Amazon sued over in-app purchases

Amazon sued over in-app purchases

Amazon is being sued by the US Federal Trade Commission (FTC) for allowing children to notch up millions of dollars of unauthorised purchases on their parents’ accounts by using its mobile app store.

Meanwhile, in separate developments, the American Authors' Guild has described Amazon's offer to give Hachette authors 100% e-book royalties "highly disingenuous", while in France the online retailer has begun charging customers one centime for deliveries, after a new law banning certain free deliveries came in yesterday (10th July).

On in-app purchasing, FTC chair Edith Ramirez said in a statement: “Amazon's in-app system allowed children to incur unlimited charges on their parents' accounts without permission. Even Amazon's own employees recognized the serious problem its process created.”

The FTC is trying to recover the payments for parents, according to the BBC.

It has complained that there is not a clear enough distinction in some app games between what costs virtual money and what cost real money. For example, in children’s game "Ice Age Village", "acorns" and "coins" both served a purpose within the game as well as being available for purchase. The game allows children’ to run up costs of up to $99.99 in the app.

In January, the FTC settled with Apple over similar proceedings and the tech company had to pay up to $32.5m (£19m) to parents whose had incurred charges.

In its response, Amazon said it was “deeply disappointed” by the FTC’s demands. "The [FTC]'s unwillingness to depart from the precedent it set with Apple despite our very different facts leaves us no choice but to defend our approach in court," the company said.

In a separate dispute Amazon is having with Hachette in the US over terms, the Author’s Guild has distributed a letter from novelist and vice president Richard Russo which called the tech company’s offer to pay authors 100% royalties on e-books “highly disingenuous.”

He wrote: “For one thing, it’s impossible to remove authors from the middle of the dispute. We write the books they’re fighting over. And because it is the writing life itself we seek to defend, we’re not interested in a short-term windfall to some of the writers we represent. What we care about is a healthy ecosystem where all writers, both traditionally and independently published, can thrive. We believe that ecosystem should be as diverse as possible, containing traditional big publishers, smaller publishers, Amazon, Apple, Barnes & Noble and independent bookstores, as well as both e-books and print books. We believe that such an ecosystem cannot exist while entities within it are committed to the eradication of other entities.”

Meanwhile it has emerged that in France, both Amazon and book store chain Fnac are flouting the spirit of the law banning free deliveries of books carrying the 5% maximum discount allowed under the 1981 fixed price law.

Amazon announced on its French website yesterday, the day after the law took effect, that it would charge one centime for deliveries. That is as an alternative to the Amazon Premium scheme, which guarantees deliveries anywhere in France within 24 hours for an annual subscription of 49 euros.

Fnac, the leading French cultural product chain, will offer the same delivery fee of one centime, according to press reports. In May it launched a subscription option Express Plus also for 49 euros a year.

There is nothing illegal about the one centime delivery charge, since the law did not specify a minimum rate for the service. And it will protect bricks and mortar booksellers as intended, French Booksellers Association (Syndicat de la Librairie Française, SLF) director Guillaume Husson told The Bookseller. For example, a book priced at 10 euros would cost 10.01 euros on Amazon, but only 9.50 euros in a bookshop, he explained.