Judge rules $26 million in damages too high for Amazon’s unfair billing

The Federal Trade Commission (FTC) recommended Amazon pay more than $26 million in damages for unfairly billing app purchases made by children, but a federal judge ruled that amount was too high. 

The disclosure was inadvertently made in a redacted version of Judge John Coughenour’s ruling last week, which found Amazon liable up until 2014 for not properly disclosing when in-app purchases were required through the company’s app store.

{mosads}Large swaths of the ruling related to damages were redacted, since the judge wanted more time and information to determine how much Amazon should pay.  

But a number of news outlets discovered the redactions could be easily circumvented if the text was copied and pasted into a new document. 

“On April 27, 2016, Amazon notified the Court that certain third parties were able to identify from the redacted order the text intended by the Court to be maintained under seal, and the Court subsequently removed that order from the docket,” Amazon lawyers wrote in a court filing last week. 

Among the redactions was the FTC’s estimate that up until 2014 Amazon brought in about $86.5 million in revenue from in-app purchases that required no confirmation password. The government agency considered those charges “high-risk” for children. 

The FTC also found more than $10 million was provided in app refunds during that time. 

The FTC got its $26 million in proposed damages by looking at the rate at which a user currently incorrectly enters a password, which the FTC said was a “reasonable proxy for the rate at which children would incur an in-app charge without consent.” That number was found to be 42.03 percent. 

“However, the Court concludes that the unauthorized charge rate of 42 percent is too inflated to be used in determining final money damages,” the judge ruled. 

The judge requested more information from Amazon and the FTC in the next few months to find another number.