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FTC files compliant against Amazon

BY Dan Berthiaume

Washington, D.C. – Amazon.com, Inc. has billed parents and other account holders for millions of dollars in unauthorized in-app charges incurred by children, according to a Federal Trade Commission complaint filed today in federal court. The FTC’s lawsuit seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company from billing parents and other account holders for in-app charges without their consent.

According to the complaint, Amazon keeps 30% of all in-app charges. In its complaint, the FTC alleges that Amazon violated the FTC Act by billing parents and other Amazon account holders for charges incurred by their children without the permission of the parent or other account holder. Amazon’s setup allowed children playing these kids’ games to spend unlimited amounts of money to pay for virtual items within the apps such as "coins," "stars," and "acorns" without parental involvement.

The complaint alleges that when Amazon introduced in-app charges to the Amazon Appstore in November 2011, there were no password requirements of any kind on in-app charges, including in kids’ games and other apps that appeal to children. According to the complaint, this left parents to foot the bill for charges they didn’t authorize. According to the complaint, kids’ games often encourage children to acquire virtual items in ways that blur the lines between what costs virtual currency and what costs real money.

The complaint highlights internal communications among Amazon employees as early as December 2011 that said allowing unlimited in-app charges without any password was "… clearly causing problems for a large percentage of our customers," adding that the situation was a "near house on fire."

In March 2012, according to the complaint, Amazon updated its in-app charge system to require an account owner to enter a password only for individual in-app charges over $20. As the complaint notes, Amazon continued to allow children to make an unlimited number of individual purchases of less than $20 without a parent’s approval. An Amazon employee noted at the time of the change that "it’s much easier to get upset about Amazon letting your child purchase a $99 product without any password protection than a $20 product," according to the complaint. In July 2012, as set forth in the complaint, internal emails again described consumer complaints about in-app charges as a "house on fire" situation.

The complaint alleges that in early 2013, Amazon updated its in-app charge process to require password entry for some charges in a way that functioned differently in different contexts. According to the complaint, even when a parent was prompted for a password to authorize a single in-app charge made by a child, that single authorization often opened an undisclosed window of 15 minutes to an hour during which the child could then make unlimited charges without further authorization. Not until June 2014, roughly two-and-a-half years after the problem first surfaced and only shortly before the Commission voted to approve the lawsuit against Amazon, did Amazon change its in-app charge framework to obtain account holders’ informed consent for in-app charges on its newer mobile devices, according to the complaint.

According to the complaint, thousands of parents complained to Amazon about in-app charges their children incurred without their authorization, amounting to millions of dollars of charges. The company’s stated policy is that all in-app charges are final and nonrefundable. According to the complaint, even parents who have sought an exception to that policy have faced a refund process that is unclear and confusing, involving statements that do not explain how to seek refunds for in-app charges or suggest consumers cannot get a refund for these charges.

This is the FTC’s second case relating to children’s in-app purchases; Apple, Inc. settled an FTC complaint concerning the issue earlier this year. The Commission is seeking full refunds for all affected consumers, disgorgement of Amazon’s ill-gotten gains, and a court order ensuring that in the future Amazon obtains permission before imposing charges for in-app purchases.

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Elevating the art of retailer and supplier collaboration

BY CSA STAFF

Sales and marketing services leader Crossmark unveiled a first-of-its-kind collaboration center on July 10 just steps from Walmart’s Bentonville, Arkansas, headquarters. The new facility offers the retailer and its trading partners a wide range of joint business planning, shopper insights and store execution capabilities.

The 18,500-sq.-ft. facility, branded as the CROSSMARK Center for Collaboration, is unlike anything in the retail industry due to its proximity to the world’s largest retailer and range of capabilities. It features nine rooms of various sizes with flat panel displays and state-of-the-art communications technology, a presentation kitchen where food samples can be prepared as a customer would in a home environment and a solutions center focused on on-shelf availability and shopper research. In addition, there are two rooms equipped with 8 foot by 16 foot PRYSM digital touch-screen walls capable of replicating store shelves and a large space on the second floor that can accommodate more than 100 people for meetings or be converted into a product display area.

At the opening ceremony, Mike Graen, Crossmark’s vp of collaboration, characterized the facility as a tool that will enable new levels of collaboration. Crossmark CEO Ben Fischer added that the Center fits with the premise on which the company was founded.

“As a service company, we were built to help other companies achieve their goals by finding better ways to build and grow brands and reduce costs,” Fischer said.

Increasingly that process involves retailers and suppliers working more closely together across a range of disciplines such as merchandising, marketing, operations and supply chain in their respective organizations. Crossmark hopes to facilitate such meetings at its new facility with existing clients as well as companies who are not its customers.

“It can’t just be for our clients because that would defeat the purpose and it wouldn’t create value for Walmart,” Fischer said. “We are going to help brands and retailers find better ways to engage with shoppers.”

While the opening of the facility marks a new chapter in collaboration between Walmart and its suppliers, the event was also an opportunity for Crossmark to recognize the contributions of Joe Crafton who retired as CEO earlier this year.

“It truly was Joe’s idea,” Fischer said of his long time business partner and predecessor. “He has always been a guy who was willing to run out in front of the pack. He found ways to do things that most of us never saw.”

From Crafton’s perspective, the inspiration for the Center wasn’t anything so grand.

“It came about as a result of me needing a parking space,” Crafton said.

While visiting Walmart’s home office for a meeting with U.S. president and CEO Bill Simon, Crafton was having difficulty locating a parking space. Desperate, he parked in the front yard of a small home adjacent to Walmart’s headquarters occupied by a woman who decades earlier had sold a portion of her land to Sam Walton.

After his meeting ended, Crafton knocked on the woman’s door to apologize for parking in her front yard. The apology turned into a 30 minute conversation that led to a connection to the woman’s son who upon his mother’s passing sold the property to Crossmark, but not until Crafton made sure Walmart didn’t have designs on the real estate.

“Joe saw a little plot of land and recognized the opportunity,” Fischer said. “The real key for us long term is we’ve got to make sure we always provide the latest and greatest capabilities and technology.”

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Survey: Mobile is top e-commerce technology investment

BY Dan Berthiaume

Chicago – Mobile is the most popular technology for e-commerce retailers to make a significant investment in. According to the 14th Annual Merchant Survey from The E-Tailing Group, 42% of respondents have made significant investments in mobile optimization.

Other popular technology areas for e-commerce investment include omnichannel integration (30%), retargeting (28%), personalization and targeting (27%) and Big Data/related CRM initiatives (27%). Eighty-one percent of e-commerce retailers are implementing consistent branding across channels and shared inventory across channels (70%).

Leading e-commerce strategies that deliver ROI include sales/specials/outlets (98%), email as a merchandising vehicle (94%), keyword onsite search (92%), cross-sell recommendations (90%), and product reviews (89%). Ninety-seven percent of e-commerce retailers use analytics to see what works, and 92% use A/B, MV or usability testing.

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