Are you responsible for purchases your kids make without your permission?

The federal government’s recent lawsuit against Amazon, in which it’s trying to recover mobile app charges that were made by children without their parents’ consent, may have you wondering how responsible you are for products and services your child buys without your authorization.

The answer depends on the circumstances, and even then it’s not always clear.

In the Amazon case, the Federal Trade Commission says the company collected millions of dollars in charges incurred by children who had purchased virtual items such as “coins,” “stars,” and “acorns” for gaming apps without their parents’ permission. The apps were installed on the Kindle Fire and other Android mobile devices.

Under state laws, parents of nonemancipated minors can void purchases and other contracts their children have made without adult permission, especially those involving face-to-face transactions, where sellers are in a position to know or suspect they’re dealing with an underage consumer, says Therese Franzén, a lawyer based in Atlanta. That means if your 13-year-old clears out his or her piggy bank and shuffles off to the local electronics store to buy a new cell phone, there’s a good chance the purchase is voidable, even if the store has a no-return policy.

But there are exceptions, including for necessities, such as food, clothing, and lodging. Also, parents' liability is unclear for online purchases, especially if a website asks the buyer to verify that he or she is at least 18 years old.

In the Amazon case, there’s another issue. When the apps were installed on the children’s devices, someone, presumably an adult, was required to enter a credit or gift card number. In that case, the Amazon’s contract probably is not with the child but with the adult who linked the account to the method of payment.

“If you are talking about a game for 8-year-olds, and the parents give their credit card number, they’re sort of asking for trouble,” Ted Claypoole, a North Carolina attorney who specializes in e-commerce issues, said.

But there’s yet another factor to consider that may work in the parents’ favor. If a company acted unconscionably or engaged in unfair practices, as asserted in the Amazon case, parents may not be responsible for the charges.

The Amazon case

The FTC says that Amazon enticed the children to buy app-related items, making it all too easy for them to do so without their parents’ consent. That was the same argument the agency made in its complaint against Apple, also in connection with app-related sales to children. Apple settled the complaint by agreeing to make at least $32.5 million in consumer refunds and change its billing practices.

When Amazon started its program in September 2011, the FTC says, it didn’t require visitors to enter a password to buy the virtual items, which allowed children to make virtually unlimited purchases without their parents’ consent. Some parents reported being billed for hundreds of dollars. (The most expensive purchase available at any one time was $99.99.) The FTC says there were thousands of consumer complaints, so many that an Amazon employee wrote an e-mail describing the situation as a “near house on fire,” the complaint says.

The FTC cites yet another internal document written in connection with Amazon's later decision to initiate a password requirement for app-related purchases of more than $20. “It’s much easier to get upset about Amazon letting your child purchase a $99 product without any password protection than a $20 product,” an Amazon Appstore manager wrote, according to the complaint.

Amazon later updated its process yet again—requiring passwords for some app-related purchases no matter how small. But not everyone was prompted to enter a password, and even if they were, the FTC said, putting in a password opened at 15-minute to one-hour window, during which unlimited purchases could be made.

The FTC says Amazon blurred the line between which virtual items required virtual currency and which required the real thing. The FTC cited one case in which a child who racked up charges still did not know how to read.

Find out how to get a refund from the Google Play store. And how to control your kid's in-app purchases on Apple devices.

What to do

Given the complexity of the issue, it’s best to avoid the problem from the start.

Talk to your children about what purchases they’re allowed and not allowed to make, especially online. Don’t keep credit, debit, and gift cards where children can get them. The same goes for passwords. Remember that if you link a credit or debit card to an online retail account, you could be asking for trouble if your child clicks on a bookmark that goes to the site and then charges up a storm.

If a mobile device has parental controls, adjust them to limit or stop unwanted purchases. Check with the device instructions or contact the manufacturer.

When downloading apps or allowing your child to sign up for any online service, read the terms and conditions, especially if you’re being asked to provide a credit- or debit-card number or link the service to your bank account. There’s a good chance you’ll find language holding you responsible for securing access to the site and liable for any charges made by third parties.

“Learn where and how money is charged to your account in any game program you link your credit card to,” Claypoole said.

If this happens to you

If you end up with a bill for a purchase your child made without your permission, don’t simply throw up your hands and pay it, even if it appears as though you’re responsible. Start by appealing to the company.

“You or your lawyer need to call the company you supposedly owe the money to and talk your way out of it,” Claypoole said. He said companies often forgive such transgressions one time, if only to avoid accusations that their business model is intended to prey on children.

If the dispute involves app-related purchases, you might try contacting the developer and ask for a refund; but there is no guarantee you'll get a response. The developer’s information may be available on the app store’s website.

If you think the company engaged in unconscionable or unfair practices, perhaps by encouraging and enabling the unauthorized purchase, file a complaint with your state attorney general or consumer protection agency, the FTC, and the Better Business Bureau.

If the charge is on your credit card, another option may be to seek a chargeback from your card issuer. But keep in mind that if the issuer grants your request, the company that billed you still can send your account for collection or even sue. So use a chargeback as a last resort, and be sure you’re legally in the right.

—Anthony Giorgianni