Google to Issue Refunds for Kids’ In-App Charges under FTC Settlement

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The Federal Trade Commission has announced that it has reached a $19 million settlement with Google Inc. over allegations it unfairly billed consumers for children’s unauthorized in-app purchases.

After receiving numerous complaints from parents that their children incurred significant charges while using mobile apps, the FTC filed lawsuits against app sellers including Apple, Google and Amazon for their role in allowing children to make these purchases without their parents’ knowledge or consent. Many consumers reported being billed for hundreds of dollars’ worth of unauthorized charges.

Mobile apps are available to download from the Google Play store. Many children’s apps are free to download, but users can pay to purchase virtual items within the app. These in-app charges can range from 99 cents to as much $200. According to the FTC lawsuit, Google initially did not require the account holder to authorize in-app purchases. Therefore, children could easily rack up significant charges without their parents’ knowledge by simply clicking a popup box within the app.

In 2012, Google adjusted the system so that a popup window that asked for the account holder’s password would appear. However, this popup reportedly did not provide any information about the charge or notify the account holder that no password would be required to make charges for 30 minutes after the password was entered. Children were able to make unlimited purchases within the app during this 30-minute window.

The FTC lawsuit alleged Google violated the agency’s probation on unfair commercial practices by billing consumers for the purchases children made while using kids’ apps that had been downloaded from the Google Play store.

Under the terms of the Google in-app purchase settlement, Google will provide full refunds to consumers who were charged for unauthorized in-app purchases made by children. The tech giant also agreed to change its billing policy to ensure it acquires express consent from consumers before charging them for purchases made within mobile apps. Google has agreed to pay a minimum of $19 million in refunds.

The Google settlement defines an eligible in-app charge as “an In-App Charge that the Account Holder indicates was: (1) paid by the Account Holder and incurred by a minor; (2) and was accidental or not authorized by the Account Holder; and (3) has not already be refunded.”

The in-app purchase settlement requires Google to notify all consumers who incurred in-app charges about the refund process. Account holders may then request a refund from Google for unauthorized in-app purchases.

Google is not the first major company to reach a settlement with the FTC over unauthorized in-app purchases made by children. In January, the federal agency announced that Apple agreed to pay a minimum of $32.5 million to refund consumers for children’s unauthorized in-app purchases.

In addition to the legal action by the FTC, Google is also facing a class action lawsuit over minors’ in-app purchases. Google has tried to dismiss the in-app purchase class action lawsuit, but a California federal judge denied its motion in July.