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Google to refund millions to app customers over its 'friendly fraud'


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Google is to refund millions of dollars to customers after failing to stop children racking up huge bills in apps downloaded from its Play store.

Under the terms of Google's settlement with the Federal Trade Commission, which comes after a similar move by Apple earlier this year, the company will spend at least $19m reimbursing parents who were forced to pay large bills following unauthorised in-app purchases by their children.

Google employees referred to the issue as “friendly fraud” and “family fraud”, the FTC claimed.

After using phones and tablets to download apps from the Google Play store, youngsters were able to make subsequent purchases of virtual items that helped them in those games. These items ranged in price from 99 cents to $200.

The FTC claimed that Google had billed customers for these purchases without gaining their consent.

"For millions of American families, smartphones and tablets have become a part of their daily lives,” said FTC chairwoman Edith Ramirez. “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 authorise.”

When Google first introduced in-app charges in 2011, the FTC claims, buying items did not require a password set up by the billpayer. This meant children could rack up huge bills simply by clicking on pop-up boxes within the app.

A year later, Google introduced this pop-up box, but it did not display any information on charges, the FTC alleged.

"Google also did not inform consumers that entering the password opened up a 30-minute window in which a password was no longer required, allowing children to rack up unlimited charges during that time," the FTC said.

This led to thousands of parents complaining to Google about the size of their bills.

As well as the refund, Google has also agreed to modify its billing practices to ensure that it obtains express, informed consent from consumers before charging them for items sold in mobile apps.

In January, Apple agreed to refund at least $32.5m to customers following similar FTC claims.