By Gautham Nagesh and Rolfe Winkler
Google Inc. has agreed to settle a Federal Trade Commission
complaint that it allowed children to rack up millions of dollars
in charges in its mobile app store without their parents' knowledge
or consent.
As part of the settlement, Google will refund a minimum of $19
million to consumers whose children made purchases inside
applications downloaded from the Google Play app store. Google will
also modify its billing practices to ensure it obtains express
consent before charging consumers for items sold in mobile
apps.
"As more Americans embrace mobile technology, it's vital to
remind companies that time-tested consumer protections still apply,
including that consumers should not be charged for purchases they
did not authorize," FTC Chairwoman Edith Ramirez said.
Many mobile apps and games sold in the Google Play store
encourage users, including children, to accumulate virtual items
that help them advance in the game. The FTC's complaint alleges
that when Google first launched its app store in 2011, it billed
consumers for these "in-app" purchases without first obtaining
authorization from the account holder.
The area is of growing importance to the search giant. In-app
purchases on Google Play are now the second largest business for
the search giant, after advertising, according to people familiar
with the company's financial results. Credit Suisse estimates that
Google Play revenue will double in 2014 to $4.4 billion.
"We've already made these product changes to ensure people have
the best Google Play experience possible, a Google spokeswoman
said. "We're glad to put this matter behind us so we can focus on
creating more ways for people to enjoy all the entertainment they
love."
Write to Gautham Nagesh at gautham.nagesh@wsj.com and Rolfe
Winkler at rolfe.winkler@wsj.com
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