Google to pay $19m for bogus kids app purchases

Google on Thursday agreed to settle a Federal Trade Commission complaint over the unfair billing of millions of dollars worth of in-app purchases, to the tune of at least $19m. The case also forced a change in Google’s billing practices as children were the users of the applications which allowed in-app purchases without authorisation.

The original complaint alleged that since 2011, Google violated the FTC Act’s prohibition on unfair commercial practices by billing consumers for charges by children made within kids’ apps downloaded from the Google Play store. Many consumers reported hundreds of dollars of such unauthorised charges, according to the complaint.

In-app charges are a component of many apps available from Google Play and can range from 99 cents to $200. In many apps the purchase of virtual items help users advance in the game but, especially for children, lines between virtual money purchases and real money purchases can be blurred, with charges made by children without obtaining account holders’ authorisation.

Initially, back in 2011, Google billed for such charges without any password requirement or other method to obtain account holder authorisation. Then in 2012, Google began presenting a pop up box that asked for the account holder’s password before billing charges but did not contain any information about the charge and opened up a 30 minute window in which a password was no longer required.

The deal actually marks the Commission’s third case concerning unauthorised in-app charges by children, following a $32.5m settlement by Apple and as as yet unfinalised complaint against Amazon for the same.

Under the terms of the settlement, Google will provide full refunds to a minimum payment of $19m
and is required to contact all consumers who placed an in-app charge to inform them of the refund process .

“For millions of American families, smartphones and tablets have become a part of their daily lives,” said 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.”