Apps and kids: Google may be next in FTC crosshairs
Apple leaped into action after the Federal Trade Commission cracked down on iPhone and iPad apps that let kids spend their parents’ money without permission. Not even a week after the news broke in January, the company’s top lawyer quietly took aim — at a competitor.
“I thought this article might be of some interest, particularly if you have not already seen it,” Apple general counsel Bruce Sewell wrote to FTC Chairwoman Edith Ramirez and Democratic Commissioner Julie Brill, pointing to a report that criticized Google’s app store over the same issue of unauthorized purchases. The previously undisclosed email was obtained by POLITICO through a Freedom of Information Act request.
If recent history is any guide — and Apple and consumer advocates have their way — Google may be next in the FTC’s crosshairs. For a time, some Android smartphone owners who entered their password to download a game or other app later discovered their kids had racked up charges within that app for up to 30 minutes afterward. That’s the reason the FTC pursued Apple — and it’s the rationale behind the agency’s newly revealed investigation of Amazon.com. The cases only raise the odds that Google is another target.
“I think [the FTC] is on the right track holding these companies accountable when they find they’re not being transparent about in-app purchases, and they’re not providing appropriate controls,” said Joni Lupovitz, vice president of policy at Common Sense Media. She declined to comment on specific FTC targets.
Google had no immediate comment. Apple and Amazon declined to comment, as did the FTC, which routinely says it does not discuss investigations.
For the FTC, the focus on in-app purchases underscores a deeper interest in applying its old consumer-protection mandate to the new world of fast-evolving smartphones. The agency has delved recently into debates over location privacy, text message spam and mobile payments. It’s also ramped up its enforcement of the Children’s Online Privacy Protection Act, or COPPA, a guiding law protecting kids under age 13.
“It’s an area we think is very important to pay attention to,” Brill said in an interview. She stressed the Apple app settlement aims to ensure “you’re not charged unless you’re aware you’re being charged, and you consent to it.” Brill declined to comment specifically on any future potential FTC cases.
The brouhaha over in-app purchases had been building at the FTC for years. Parents would download iPhone or iPad apps for their kids and input their password once — but that would open a 15-minute window during which children could continue making purchases within the app without getting their parents’ explicit approval. With Apple, the commission said it registered “at least tens of thousands of complaints” from parents who “reported millions of dollars in unauthorized charges” to the company.
Under the FTC settlement, Apple had to alter its billing practices and provide refunds to parents totaling at least $32.5 million. The company had previously made some changes on its own. In 2011, it closed the 15-minute window in which iPhone or iPad users could make unlimited purchases without additional consent, and it later settled a related class-action lawsuit. The FTC took action against Apple anyway — a move that left the tech giant seething.
“To us, it smacked of double jeopardy,” CEO Tim Cook wrote in a rare blog post after the case was announced.
Behind the scenes, Apple sought to convince regulators it shouldn’t be singled out for blame. Sewell, the company’s general counsel, shared with Ramirez and Brill a Consumer Reports story that faulted Google for allowing your “kid to spend like a drunken sailor” for 30 minutes after an adult initially entered a password.
Like Apple, Google has revised some practices on its own. The company began working on new controls for its Google Play app store in January, rolling out the changes in March. Google that month learned of a lawsuit over its in-app purchasing practices. European regulators have also begun to hound the company with questions.
For the moment, though, it’s Amazon — not Google — tangling publicly with the FTC.
The online retail giant last week revealed it is the target of an FTC investigation, but the company stressed it would go to court before settling with the commission. In a letter to Ramirez, first reported by The Wall Street Journal, Amazon stressed its conduct was lawful — and when parents found unwanted charges, the company said it “refunded those purchases.” And Amazon said its new practices already exceed what the FTC required of Apple in its January settlement.
Consumer advocates, however, say formal FTC settlements are crucial.
“Companies change their practices and their privacy policies with the weather,” said Lupovitz. “That’s why you want them to be under an FTC order that says here’s a principle or policy or practice, you’ve got to stick to it.”
(Article and body image via Politico)