Google To Pay Out At Least $19M To Settle FTC Complaint On Kids In-App Charges

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Some closure to the ongoing FTC investigation involving parents who were billed for charges made by their children on apps that their kids were not authorized to use: Google will be refunding parents “at least” $19 million to settle the case, and it will be required to change its billing practices to require parental consent before making charges.

The settlement requires Google to contact all consumers who placed an in-app charge to inform them of the refund process for unauthorized in-app charges by children within 15 days of the order being finalized. Google must make these refunds promptly, upon request from an account holder, the FTC notes, continuing: “Should Google issue less than $19 million in refunds to consumers within the 12 months after the settlement becomes final, the company must remit the balance to the Commission for use in providing additional remedies to consumers or for return to the U.S. Treasury.”

This case is the third related to unlawful in-app charges made to parents in relation to their children racking up the bills. Apple settled a separate case with the FTC and is paying out at least $32.5 million. A separate case filed in July involves similar charges levied via Amazon’s appstore.

This particular case dates back to 2011, or when Google first introduced in-app charges.

“For millions of American families, smartphones and tablets have become a part of their daily lives,” said FTC Chairwoman Edith Ramirez in a statement. “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.”

The FTC notes that the charges range from 99 cents to as high as $200. “In many apps used by children, users are invited to accumulate virtual items that help them advance in the game, though as the FTC’s complaint notes, the lines between virtual money purchases and real money purchases can be blurred,” the FTC notes in its statement. “The FTC’s complaint alleges that Google billed consumers for many such charges by children without obtaining account holders’ authorization, leaving consumers holding the bill.”

The problem was compounded by Google’s own systems — where charges did not require a password or any other method to authenticate a user. “Children could incur in-app charges simply by clicking on popup boxes within the app as they used it.”

And when the pop-ups asking for a password did appear, it didn’t contain any details about the charge. “Google also did not inform consumers that entering the password opened up a 30-minute window in which a password was no longer required, allowing children to rack up unlimited charges during that time.”

It also didn’t help to hear about Googlers’ attitudes to the whole situation: while “thousands of consumers” complained, the FTC notes, “Google employees referred to the issue as “friendly fraud” and “family fraud” in describing kids’ unauthorized in-app charges as a leading source of refund requests.” Google also simply referred those requesting refunds to the app developers.

“Should Google issue less than $19 million in refunds to consumers within the 12 months after the settlement becomes final, the company must remit the balance to the Commission for use in providing additional remedies to consumers or for return to the U.S. Treasury,” says the FTC.

There will be a call with the FTC at 1.30 Eastern, and we’ll update with any comments after that.