Feds nail Google for ‘family fraud;’ fine the company $19 million

A drop in the bucket. But it’s a start.

The Federal Trade Commission (FTC) hit Mountain View-based Google with a $19 million fine for unfairly billing children — yes kids — for millions in unauthorized credit card charges from the tech titans Google Play app store.

The children, many of them reportedly using their parents’ Android-powered mobile devices, incurred individual charges that ranged from 99 cents to $200. The move by the FTC follows similar actions against Apple in January, which cost them $32 million for basically the same problem, and Amazon, which was hit in July.

In the latter’s case, internal emails obtained by the FTC showed Amazon was aware of the practice and did little to stop it.

Beginning sometime in 2011, Google began violating what the government called “unfair commercial practices” by charging children for costs incurred downloading apps from Google Play’s virtual marketplace. Victims, tellingly, had no idea they were being billed and began to alert the FTC to the conundrum when the charges showed up on credit card statements.

The charges from the Google Play store have their genesis in the widely practiced “virtual” money protocols, that is, users are invited to amass virtual items that can help them get them a leg up playing the games or can be “cashed in” for other virtual goods.

The FTC complaint said Google billed users without getting their authorization first. In other words, children clicking on a pop-up box were frequently billed with no warning. The FTC said that in late 2012, the Google Play app store began introduced in-app payment charges, but users didn’t need to enter a password before they got hit with charges.

According to a release by the FTC on the issue, Google knew what was going on, just as Amazon, but did little to stop it:

“Google employees referred to the issue as “friendly fraud” and “family fraud” in describing kids’ unauthorized in-app charges as a leading source of refund requests, according to the complaint. The complaint further alleges that Google’s practice has been to refer consumers seeking refunds first to the app developer.”

VentureBeat reached out to Google’s press team, who are usually good at responding to reporters questions, but there has been no response as yet.

The FTC have ordered Google to refund all bogus in-app charges related to the Google Play store and to change their billing processes, stating they must get specific consent before billing for in-app charges. The FTC are holding a press conference in Washington this morning at 11:30am PT. Stay tuned.