The Federal Trade Commission (“FTC”) announced on Thursday, September 4 that Google has agreed to settle charges and refund no less than $19 million to consumers whose children were allegedly deceived into making mobile purchases through the Android app store.
Google offers thousands of apps for free or a specific dollar amount through its Google Play Store, which is preloaded on Android mobile devices. In many children’s game apps, after installation, children may purchase virtual items within an app — “in-app charges.”
The FTC’s complaint alleges that Google violated the FTC Act’s prohibition against “unfair or deceptive acts or practices” beginning in March 2011 by billing parents for these in-app charges without any password requirement or other method to ensure account holder authorization. According to the FTC, Google took no steps to require account holder involvement within an app prior to in-app charges being incurred by children until mid- to late 2012, following complaints from parents. Google then began requiring a password entry in connection with in-app charges. However, the FTC alleges that this password prompt does not contain any information about in-app charges and does not inform consumers that password entry begins a thirty-minute window during which password entry is not required for in-app charges, thereby allowing a child to rack up unlimited charges during that time. According to the complaint, may consumers complained specifically about the fact that Google billed for in-app activities without obtaining their consent. For example, a parent of a five-year old son who incurred over $400 in unauthorized charges playing the “Bug Village” app stated that “these multiple purchases were not approved by me.”
Under the terms of the settlement, Google must promptly provide full refunds — with a minimum payment of $19 million — to consumers it billed for children’s unauthorized in-app charges. Google must also change its billing practices to ensure that it obtains “express, informed consent” from account holders for in-app charges. If Google seeks and obtains express, informed consent to billing for potential future in-app charges, then it must permit the account holder to revoke consent at any time.
“For millions of American families, smartphones and tablets have become a part of their daily lives,” said FTC Chairwoman Edith Ramirez in the FTC’s press release announcing the settlement. “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.”