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​Amazon to fight FTC on fines for kids' in-app purchases

Regulatory body wants e-commerce giant to agree to fines, policy changes related to children buying items in apps when logged in with parent's account.

Kindle Fire HDX tablet James Martin/CNET

Amazon would rather go to court than accept the Federal Trade Commission's terms for policy changes and fines related to children spending money through apps on mobile devices.

The company faces a lawsuit from the FTC, which wants Amazon and other tech companies to change policies affecting how kids make in-app purchases through their parents' accounts. These purchases are a result of children buying virtual goods inside of apps, like energy or coins in a game. In response to the proposed complaint, Amazon sent a letter to the FTC on Tuesday (see PDF below) saying the agency's decision leaves the company "no choice but to defend our approach in court."

These types of purchases are not just an issue for Amazon's customers. Parents who let their kids play with any tablet or phone runs the risk of them spending money without permission.

For its part, the FTC says it wants companies to make their in-app purchase process clear for parents so their kids don't accidentally run up a large bill without permission. The regulatory agency's 20-year terms include more record keeping and changes to how companies disclose information, according to The Wall Street Journal. The terms are similar to ones determined for Apple. Apple agreed earlier this year to refund at least $32.5 million to customers as part of its settlement with the FTC.

Amazon argues that the agency shouldn't use its dealings with Apple as a template for reviewing Amazon's practices and says it readily refunds customers when purchases are mistakenly made. The Seattle company said it was "deeply disappointed" to be lumped in with the FTC's decisions about Apple.

"We have consistently improved the customer experience in response to data," the letter reads.

The FTC's terms also include more-prominent notices, required passwords for purchases, and a better refund process. The agency said it's received thousands of complaints about unauthorized in-app purchases made by kids, with some situations involving hundreds of dollars, according to the Journal. And while Amazon has marketed the Kindle Fire tablet as a kid-friendly device with plenty of parental controls, the FTC said Amazon didn't required "informed consent" from parents for in-app purchases until June. Amazon has allowed in-app purchases since at least 2012.

Amazon letter to FTC