Amazon will have to refund parents whose children made in-app purchases without permission

E-commerce giant Amazon will have to reimburse parents of children who made in-app purchases without their permission as per a ruling in Seattle. A federal judge has directed Amazon to set up a year-long process to reimburse these people but rejected US regulator FTC's request for a $26.5m (£21m) lump-sum payout.

The litigation which was pursued by the Federal Trade Commission accused Amazon of making it too easy for children to run up bills while playing games on smartphones and tablets, resulting in an estimated $86m of unauthorised charges. The judge, however, gave Amazon some benefit of the doubt saying it might have taken into account failed password attempts unrelated to unauthorised purchases by children and thus the FTC's damages request was "too high".

The company has now been asked to set up a notice-and-claims process starting early 2017 to alert parents of their eligibility for refunds, and then reimburse them.

"This approach removes the uncertainty of the proper lump-sum amount that the parties have vigorously disputed. Moreover, it accomplishes the goals of placing liability on Amazon and refunding eligible customers," reads the ruling.

Amazon said it would offer gift cards to compensate for the losses but the judge denied the request.

In the past, the FTC has brought forward similar cases pertaining to Apple and Google with Apple agreeing to refund at least $32.5m and Google at least $19m of such unauthorised purchases.