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Google settles with the FTC for $19 million over in-app purchases

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Search giant follows Apple in second settlement agreement

Google is now the latest company to settle with the Federal Trade Commission over the ease of in-app purchases, to the tune of $19 million. In a press release from today, the FTC states that the company has agreed to fully refund consumers who claim to be victims of unintended purchases, made mostly by the account-holders' children, as well as to change how in-app purchases work by making the process more obvious.

In January, Apple chose to settle for $32.5 million over a similar complaint filed by the FTC, and following that, introduced changes to its own app store's purchasing policy to deter unauthorized purchases. Meanwhile, Amazon rejected the FTC's proposed settlement in July, even going so far as sending a letter to the commission inviting them to file a lawsuit to bring the case to court, which the FTC then did.

In-app purchases can range from 99 cents to $200 on Google Play

The original FTC complaint claimed that, beginning in March of 2011 when Google began allowing in-app purchases, the company "began billing for such charges without any password requirement or other method to ensure account holder authorization." It also stated that parents began logging complaints about unauthorized purchases within weeks of the feature's launch, but that "Google took no steps to require account holder involvement within an app prior to in-app charges being incurred by children until mid- to late 2012," which is when the company first began requiring a password for such purchases. Even then, a purchase made with a password would open a 30-minute window during which more purchases could be made without additional verification.

The complaint further highlighted Google's complicity in the matter, citing an internal 2012 email from a Google project manager that refers to the type of unwarranted purchase as "friendly fraud," or "family fraud." In that email it is also made clear that, while Google was aware these purchases made up almost 80% of all chargebacks (when a consumer asks a credit card company to reverse a completed purchase), the company still chose to direct complaints to the app developers rather than resolving the issue itself.

The FTC has given Google 12 months to pay back the full charges to consumers before the commission steps in and takes the unpaid balance from the company to distribute to complaining consumers themselves.