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Oversight? Or gaming the system?

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Monday, July 14, 2014


Some people think Amazon’s winking eye logo is starting to look like a hoodwink.

On Thursday the Federal Trade Commission filed a lawsuit that could force the amazonian company to refund customers who may have been duped by somewhat sketchy practices. At issue is whether the company billed for in-app charges without the consent of the account holder. How is that even possible? Easy as stealing candy from a baby. Or maybe more accurately, easy as asking a baby if he’d like some candy, and then charging Mom and Pop for the sweet stuff.

Amazon apparently offers several game apps for children. The kids can play for a while for free before being asked if they’d like to purchase additional tokens, treasures or whatnots to continue. Kid presses yes, parents get charged. One parent complained that her young child wasn’t able to read yet, let alone agree to a credit card charge.

It’s easy to wag fingers at the parents for not knowing what their kids are doing on those ubiquitous smart phones and tablets. But did I sit and watch every episode of Sesame Street with my kids?  For all I know, while I was making a cup of tea in the kitchen Bert and Ernie taught the tots how to hot wire a car for a joy ride. It may have been parental guilt or embarrassment that allowed the game to keep going as long as it did. When parents complained about bills, some as high as $300, Amazon often forgave the debt and eventually responded to the problem by changing the apps so that when junior hit $20 in charges, Mom and Pop were notified. That sounds like a responsible company response, right?

The thing is, parents are less likely to complain about an unauthorized $19.99 charge. Most probably just suck it up and pay it before deleting the games or making sure their kids fully understand the difference between free virtual tokens and virtual tokens that look, sound and function just like free ones but cost actual money. And while they are at it, they might explain the savings and loan scandal to the tykes.

Apple settled a similar complaint with the FTC earlier this year.

If the FTC gets its way, in the future any and all in-app purchase will require approval from the actual account holder, and not just any pudgy little finger that manages to press a button.

Some of Amazon’s very own employees made similar suggestions to the powers that be, according to the FTC suit. The people working in call centers who had to deal directly with angry customers, I suspect, came up with the solution pretty quickly: If you want to charge customers, it’s probably a good idea to let them know.

No matter who wins the FTC versus Amazon battle, there’s a lesson to be learned. It’s dangerous to get smug at the top. High ranking officers would be wise to pay attention to what those in the trenches are saying. The Brass, the Suits or, perhaps in the case of Amazon, The Cleaner Sweatshirts may understand complex strategic planning, dividend yields and amortization of intangibles but they shouldn’t dismiss the knowledge of their foot soldiers. Put another way, since I’m mixing metaphors like milkshakes, remember that every rung on the corporate ladder contributes to its strength.

If in the future Amazon is required to notify customers of all in-app charges, it is sort of good news/bad news for the rest of us. The good: No surprise bill. The bad? Imagine the melt-downs in restaurants and airplanes when little Noah or Sophia is told no.

Mama and Papa may decide that the magic acorn needed to save the hungry chipmunk or whatever, is well worth another dollar.


Vivian McInerny blogs on popular culture for Oregon Business.



0 #1 Dear VivianGuest 2014-07-18 03:12:38
Enjoyed your article very much. There are enough scams without a legitimate (?) company entering the "S" field.
Another good subject to delve into may be the over-sixty-two mortgage gimmick. Most banks and other financials are paying out big bucks for so-called celebrities to hawk their goods, such as former Senator Thompson of Tennnesee.

Your writing has always been delightful to read and follow, keep it up.
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0 #2 Author respondsGuest 2014-07-19 22:28:26
Thank-you for your kind words.

Marketing reverse mortgages to older adults would make a good topic for a future blog. My new retirement plan: Become a "celebrity' spokesperson.
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