Google to refund customers $19 million for unauthorized in-app charges

Google will pay around $19 million to refund customers unfairly charged for in-app purchases made by children without authorization from their parents.

The payment comes as part of a settlement after the Federal Trade Commission filed a complaint alleging that consumers were unknowingly billed millions of dollars for charges on apps assumed to be mere games but that in fact have features that require users to pay real money. These games include Air Penguins and Ice Age Village. 

The complaint alleges Google violated the FTC's prohibition on "unfair" business practices by billing consumers as much as hundreds of dollars for unauthorized charges. 

"For millions of American families, smartphones and tablets have become a part of their daily lives," FTC Chairwoman Edith Ramirez said in a statement. "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."

Apps downloaded from the Google Play Store can be purchased or, in some cases, are "free" – a controversial term since many free apps also allow for in-app spending. The complaint states that in-app charges "can range from $0.99 to $200 and can be incurred in unlimited amounts." Often, these apps are games intended for children to play.

According to the FTC, parents have said they were unaware these games included activities that would cost real money. Google first introduced in-app charges in 2011. Although a popup does appear to tell users how much an item in an app costs, called a "Charge Popup," users can easily proceed with the charge by clicking a button labeled "Continue." Often, once a user cleared the popup, no further action was required before Google billed the account. However, in 2012 Google did start requiring a password to be entered in order to complete an in-app purchase. 

Google originally told aggrieved customers to take up their complaints with the app developers themselves; most apps sold in the Google Play Store and downloaded to mobile devices running Google's Android operating system are made by third-party app developers who are unaffiliated with Google. 

The settlement will require Google to contact customers individually who were charged for in-app purchases and let them know of the process required to obtain a refund for unwarranted in-app purchases. 

This is the third such case in which the FTC has gone after unauthorized in-app charges made by children. Earlier this year, a settlement was reached with Apple in a similar case. That settlement required Apple to pay $32.5 million to refund customers unfairly billed for unauthorized charges in addition to requiring Apple to get explicit permission before billing customers for in-app purchases. And in July the Commission also sued Amazon for similar charges.

Similarly, the European Union has taken steps to reform in-app spending. In July the European Commission announced it was working with large tech companies to change the way apps are marketed. Reforms being pushed by the Commission include omitting the word "free" from games that allow for in-app purchases, regardless of whether they are free to download; prohibiting games from urging children to buy items within the game; and increased information provided to customers about payment arrangements prior to making a purchase.