Feds Crack Down on Google Over Kids’ App Spending

The company will pay $19 million for failing to stop children’s spending sprees.

A sign is posted on the exterior of Google headquarters on January 30, 2014 in Mountain View, California.  
National Journal
Sept. 4, 2014, 8:30 a.m.

Google is the latest com­pany to face fed­er­al charges for fail­ing to pre­vent chil­dren from rack­ing up big bills for their par­ents.

The com­pany agreed Thursday to re­fund at least $19 mil­lion to con­sumers to settle a case with the Fed­er­al Trade Com­mis­sion.

Ac­cord­ing to the agency, Google un­fairly billed con­sumers whose chil­dren made un­au­thor­ized pur­chases us­ing mo­bile apps down­loaded from the Google Play store. The in-app pur­chases for vir­tu­al items could range from 99 cents to $200. Google failed to prop­erly ob­tain the con­sent of the ac­count hold­er be­fore com­plet­ing the pur­chases, the FTC said.

In-app pur­chases are a re­l­at­ively new fea­ture, but have be­come a big source of rev­en­ue. For­cing com­pan­ies to step up pro­tec­tions against un­wanted pur­chases has been a ma­jor fo­cus for the FTC this year. Apple already agreed to a $32.5 mil­lion set­tle­ment with the FTC, while Amazon plans to fight the charges in court.

“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,” FTC Chair­wo­man Edith Ramirez said in a state­ment.

Ac­cord­ing to the com­plaint, Google al­lowed users to make in-app pur­chases without any pass­word au­thor­iz­a­tion in 2011. In 2012, Google in­tro­duced a pop-up pass­word win­dow, the FTC said, but it did not in­clude in­form­a­tion about the ac­tu­al pur­chase.

Google em­ploy­ees in­tern­ally re­ferred to the chil­dren’s pur­chases as “friendly fraud” and “fam­ily fraud,” the FTC dis­covered.

In a state­ment, Google said it has already made changes to pre­vent sim­il­ar prob­lems in the fu­ture.

“We’re glad to put this mat­ter be­hind us so we can fo­cus on cre­at­ing more ways for people to en­joy all the en­ter­tain­ment they love,” the com­pany said.

Apple, which settled its case with the FTC in Janu­ary, re­portedly egged on the FTC to sue Google. Ac­cord­ing to Politico, Apple gen­er­al coun­sel Bruce Sewell sent an email to FTC Chair­wo­man Edith Ramirez, say­ing a news art­icle about un­au­thor­ized pur­chases on Google An­droid devices “might be of some in­terest.”

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