Google recently announced it will refund $19 million for in-app purchases from children's apps.
"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 authorize," said Edith Ramirez, chairwoman for the FTC.
The FTC said the company had unfairly billed parents for charges their children made while playing games online. Children could put hundreds of dollars worth of in-app purchases on a parent's credit card without their parents' knowledge, with the push of a button.
Google will also modify its billing practices so that parents are more in the know about purchases made by their children, and more importantly, agree to those purchases.
In one game, Air Penguins, children can purchase digital fish at a price of $49.99 in real dollars to feed their virtual penguins who live in a virtual ice world.
Google began offering the in-app purchases in 2011. At that time the company did not require a password or any other sort of parental consent. In 2012, the company did begin requiring a password for purchases, but once that password was put in, a 30-minute window would allow for purchases to be made without the password.
Prior to the FTC stepping in, Google had told the thousands of parents who called to complain to talk the app developers, who are not in charge of processing transactions. Parents were unhappy about the charges, saying in some cases their children were unaware they were using real money.
Google employees began referring to the refund requests as "friendly fraud" or "family fraud," according to the FTC.
The changes were implemented in March of 2014, making it clear the differences between real and virtual money and when each was being spent. Customers can now choose to enter a password each time a transaction is made.
"We're glad to put this matter behind us so we can focus on creating more ways for people to enjoy all the entertainment they love," said a Google spokeswoman.
All customers who are deserving of a refund will be contacted by the company.
"We're not alleging there was any malicious intent here," Ramirez said. "We are saying that companies need to ensure they obtain informed consent."
A similar case was settled between the FTC and Apple in January. Apple refunded customers $32.5 million for charges made by children and changed their billing to include parental consent.
The FTC has also recently sued Amazon for the same issue.