UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Carrie Grube
v. Civil No. 16-cv-126-LM Opinion No. 2017 DNH 179 Amazon.com, Inc., et al.
O R D E R
In early 2015, Carrie Grube discovered that her credit card
had been charged more than $2,500 for in-app purchases made on
her children’s Amazon Kindle Fire devices. After unsuccessfully
disputing the charges with her credit card issuer, Synchrony
Bank (“Synchrony”), Grube brought suit against Synchrony and
Amazon.com, Inc. (“Amazon”) for violations of state and federal
law. Defendants now move for summary judgment on all claims.
Grube objects and moves for summary judgment on her federal
claim against Synchrony. For the reasons that follow, the court
grants defendants’ motion and denies Grube’s motion.
STANDARD OF REVIEW
Cross motions for summary judgment proceed under the same
standard applicable to all motions for summary judgment, but the
motions are addressed separately. Fadili v. Deutsche Bank Nat’l
Tr. Co., 772 F.3d 951, 953 (1st Cir. 2014). A movant is
entitled to summary judgment if it “shows that there is no genuine dispute as to any material fact and [that it] is
entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). In reviewing the record, the court construes all facts
and reasonable inferences in the light most favorable to the
nonmovant. Kelley v. Corr. Med. Servs., Inc., 707 F.3d 108, 115
(1st Cir. 2013).
BACKGROUND
Amazon operates an Appstore, in which customers can view
and download applications to use on smartphones and Amazon’s
Kindle Fire tablets. Within certain applications, users can
make “in-app purchases” to enhance an application. See doc. no.
25-2 at ¶ 2.
I. Amazon’s In-App Purchasing System
In 2011, when Amazon first implemented its in-app
purchasing system, children could make in-app purchases without
parental consent and without inputting a password.1 Between 2011
and June 2014, Amazon made changes to its in-app purchasing
1 A different federal lawsuit against Amazon which predates this case provides important factual context here. See FTC v. Amazon.com, Inc., No. C14-1038-JCC, 2016 U.S. Dist. LEXIS 55569 (W.D. Wash. Apr. 26, 2016). As a result of that lawsuit, Amazon made significant changes to its in-app purchasing protections. Id. at *6-7. All of the changes predated the facts in this case, and Grube does not dispute the description of Amazon’s in- app purchasing protections as set forth in that court’s April 26, 2016 order. For this section of its factual summary, the court draws heavily from the facts described in that order.
2 system, including requiring passwords before certain in-app
purchases, adding parental control features, and providing
better notice in its Appstore interface about in-app purchasing.
Then, in June 2014, Amazon implemented a refined first-time
purchase prompt that required account holders both to enter
their password before making the first in-app purchase on a
device and to select whether they would like to require a
password for future in-app purchases.
In July 2014, the Federal Trade Commission (“FTC”) brought
suit against Amazon, challenging its in-app purchasing system
dating back to November 2011. See Amazon.com, 2016 U.S. Dist.
LEXIS 55569, at *7. The Western District of Washington held
that Amazon’s in-app purchasing system and billing practices
between November 2011 and June 2014 violated the FTC Act. The
court concluded that during that period, customers were charged
for in-app purchases that were made without their authorization.
The court concluded that Amazon’s unfair billing practices
continued until June 3, 2014, when Amazon made changes to the
in-app purchasing prompts that “clearly informed [users] both
about the existence of in-app purchases and the scope of their
consent . . . .” Id. at *23-24.
3 II. Facts Related to Plaintiff’s Case
In late 2014, after Amazon had instituted the changes to
its in-app purchasing protections, Carrie Grube purchased two
Amazon Kindle Fire HD tablets: one for her nine-year old son and
the other for her five-year-old daughter. She registered the
Kindle devices with her Amazon account. As part of the
registration process, Grube agreed to Amazon’s “Conditions of
Use,” which governs use of the Appstore on each Kindle. Grube
linked her Amazon-branded credit card, issued by Synchrony, as
the method of payment for her Amazon account. Grube created a
password for purchases on each Kindle device and did not share
those passwords with her children. The password for her son’s
Kindle was the four digit combination of the month and date of
his birthday.
At the time Grube purchased the Kindle devices, Amazon had
instituted the following safeguards to protect against
unauthorized purchases:
First-Time Purchase Prompt: When a user attempts to complete an in-app purchase on a Kindle device for the first time, she is prompted to enter the Amazon password associated with the device. Additionally, the user is prompted to make an affirmative choice whether to require the password for all future in-app purchases, which enables a Parental Controls feature.
Parental Controls: Amazon account holders can enable the Parental Controls feature on the Kindle at any time in the device settings menu. With Parental Controls
4 enabled, a Parental Controls password is required for all in-app purchases.
Disable In-App Purchasing: Users can disable in-app purchasing on a Kindle altogether through the Parental Controls menu.
High-Price Password: Even if Parental Controls is disabled on a device, all in-app purchases of $19.99 or more require successful entry of the account holder’s password.
Password for Specified Apps: Certain apps that have been designed for use by children require a password for in- app purchases. Once the customer enters a password for an in-app purchase, a 15-minute purchasing window opens in which purchases can be made without additional password entry.
High-Frequency Password: Password entry is required when a customer attempts to make a second in-app purchase within a five-minute period. Entering the account password opens a 60-minute purchasing window.
Notice About In-App Purchases: For apps that allow in-app purchasing, the app details page in the Amazon Appstore lists “In-App Purchasing” under the “Key Details” heading and contains the following information: “NOTE: This app contains in-app purchasing, which allows you to buy items within the app using actual money. On Amazon devices, you can configure parental controls from the device Settings menu by selecting Parental Controls.” Doc. no. 25-5.
Immediate Order-Confirmation Emails: After each in-app purchase, Amazon sends an immediate order-confirmation email to the email address associated with the user’s Amazon account.
Between December 2014 and February 2015, Grube occasionally
made small game purchases for her children on the Kindles. In
February 2015, Grube reviewed the billing statement for her
Amazon credit card account and noticed charges in the amount of
5 $2,574.87 that she claims were unauthorized. The disputed
charges were for 72 in-app purchases that were made from and
downloaded to her Kindle devices. It is unclear whether Grube
had enabled Parental Controls on the Kindle devices. If she
had, then each in-app purchase would have required successful
entry of the device password. If she had not, then 52 of the 72
purchases would have still required the password because of
other safeguards Amazon provides.
The majority of these in-app purchases were made within two
sports-related apps—MyNBA2K15 and WWE SuperCard. Grube concedes
that “[w]restling is something my son is interested in” and
acknowledges that he could have made the disputed purchases.
Doc. no. 25-22 at 53 of 71. Indeed, Grube admits that she
cannot think of anyone other than her son who could have made
the in-app purchases. Id. Grube received an immediate
confirmation email from Amazon after each of the disputed in-app
purchases, but she never reviewed these emails because she no
longer used that particular email account.
On February 21, 2015, Grube called Synchrony to dispute the
charges on her Amazon credit card billing statement. She
notified Synchrony that she had not authorized the charges in
question. Grube informed Synchrony that she had not used the
credit card since December 2014 and expressed concern about
6 potential identity theft. Synchrony investigated Grube’s claim
and determined that the charges were for digital downloads on
her own Kindle devices. Synchrony determined that Grube had
authorized the charges because she released her credit card
information to a third party by linking the card to her Kindle
devices that she provided to third parties. On April 24, 2015,
Synchrony mailed Grube a letter informing her that it had denied
her fraud claim for that reason, though Grube claims that she
never received the letter.
Grube contacted Synchrony again on June 1, 2015 to dispute
the charges. Synchrony re-investigated her fraud claim and
again determined that the charges were authorized. In September
2015, Grube filed a complaint with the Better Business Bureau,
contending that the charges to her Amazon credit card were
fraudulent. Synchrony opened a fraud investigation for the
third time. In November 2015, Synchrony again denied Grube’s
fraud claim after confirming with Amazon that the disputed
charges were for digital downloads to one or more Kindles
labeled “Carrie’s Fire.” Doc. no. 25-19 at 3 of 4.
On December 15, 2015, Synchrony sent a letter to the Better
Business Bureau, copying Grube, stating its conclusion that the
charges were neither fraudulent nor unauthorized and that the
purchases “may have been downloaded by someone that was given
permissible use of the device.” Doc. no. 25-18 at 5-6 of 9.
7 The letter further suggested that a “comparison can be done
between the device, her Amazon.com account, and her Synchrony
Bank billing statement to confirm the validity of what is on the
device.” Id. at 5. In April 2016, Grube filed suit against
Amazon and Synchrony.
DISCUSSION
Grube alleges that Amazon violated the New Hampshire
Consumer Protection Act (“CPA”), RSA 358-A:2 (Count II) and
breached the duty of good faith and fair dealing (Count IV) by
enticing children to make in-app purchases. She alleges that
Synchrony violated the federal Truth in Lending Act (“TILA”), 15
U.S.C. § 1643 (Count I) and the New Hampshire Unfair, Deceptive,
or Unreasonable Collection Practices Act (“UDUCPA”), RSA 358-
C:3, VII (Count III) in attempting to collect unauthorized
credit card charges.2 Defendants move for summary judgment on
all four claims. Grube moves for partial summary judgment on
Count I. The court deals first with the claims against Amazon
and then addresses the claims against Synchrony.
2 Although the complaint asserts all four counts against the defendants generally, it is clear from the allegations in the complaint and Grube’s subsequent pleadings that Counts I and III are asserted against Synchrony only, while Counts II and IV are brought only against Amazon.
8 I. Claims Against Amazon
A. Violation of the CPA, RSA 358-A:2 (Count II)
Grube alleges that Amazon violated the CPA by enabling
children to make purchases on Kindle devices without the credit
card holder’s authorization.
The CPA makes it “unlawful for any person to use any unfair
method of competition or any unfair or deceptive act or practice
in the conduct of any trade or commerce within this state.” RSA
358-A:2. “Such unfair method of competition or unfair or
deceptive act or practice shall include, but is not limited to,”
certain listed commercial actions. Id. In determining which
commercial actions “not specifically delineated” are covered by
the CPA, the New Hampshire Supreme Court employs “the ‘rascality
test.’” Axenics, Inc. v. Turner Constr. Co., 164 N.H. 659, 675
(2013). “Under the rascality test, the objectionable conduct
must attain a level of rascality that would raise an eyebrow of
someone inured to the rough and tumble world of commerce.” Id.
at 675-76 (internal quotation marks and citation omitted). The
New Hampshire Supreme Court looks to “federal courts’
interpretation of the Federal Trade Commission Act for guidance”
to determine what actions are unlawful. State v. Moran, 151
N.H. 450, 452-53 (2004) (citing RSA 358-A:13).
Grube challenges Amazon’s billing practices with respect to
in-app purchases. Unlike the in-app purchasing system that the
9 Western District of Washington found violated the FTC Act, the
Kindle devices Grube purchased for her children provided the
extensive protections listed supra at 4-5 to prevent
unauthorized transactions. And, the events relevant to Grube’s
case occurred in early 2015—after Amazon’s revised first-time
purchase prompt was in place. Thus, before the first in-app
purchase occurred on Grube’s Kindle devices, Amazon required
Grube to enter her password and select whether to require a
password for all future in-app purchases.
Grube complains that Amazon’s in-app purchasing protections
violate the CPA by “plac[ing] the burden on the consumer to
anticipate potential issues, and plac[ing] the burden on the
consumer to try to enable those features.” Doc. no. 29-1 at 3-
4. Grube was prompted to make an affirmative choice with
respect to passwords and in-app purchases before she could ever
make in-app purchases on the devices; responding to this
automatic prompt places only a minimal burden on the account
holder and the prompt is designed to protect the account holder.
Moreover, Amazon now offers parental control settings and the
ability to disable all in-app purchases, giving parents like
Grube the tools to prevent their children from making in-app
purchase without their knowledge and consent. Viewing the
evidence in the light most favorable to Grube, no rational jury
10 could find that Amazon’s actions in this case come close to
anything that might resemble “rascality.” Axenics, 164 N.H. at
675-76. Accordingly, Amazon is entitled to summary judgment on
Count II.
B. Duty of Good Faith and Fair Dealing (Count IV)
In Count IV, Grube alleges that Amazon breached the duty of
good faith and fair dealing because it enticed minor children to
download “bait applications and games” and spend “game currency”
without parental knowledge or permission. She ties her claim to
Amazon’s Conditions of Use, the contract governing Grube’s
account and her use of Amazon services on her Kindles. Grube
contends that New Hampshire law governs her good faith and fair
dealing claim, while Amazon argues that the claim arises under
Washington law. The court need not decide that question,
however, because Grube’s claim fails under the substantive law
of both states. See Lambert v. Kysar, 983 F.2d 1110, 1114 (1st
Cir. 1993).
Under Washington law, “‘[t]here is in every contract an
implied duty of good faith and fair dealing’ that ‘obligates the
parties to cooperate with each other so that each may obtain the
full benefit of performance.’” Rekhter v. Dep’t of Soc. &
Health Servs., 323 P.3d 1036, 1041 (Wash. 2014) (quoting Badgett
v. Sec. State Bank, 807 P.2d 356, 360 (Wash. 1991)). The duty,
11 however, does not “inject substantive terms into the parties’
contract.” Badgett, 807 P.2d at 360. Rather, the duty
“requires only that the parties perform in good faith the
obligations imposed by their agreement.” Id. Accordingly, the
duty is not “free-floating,” but “exists only in relation to
performance of a specific contract term.” Id.
Grube asserts that, to the extent the court determines that
her good faith and fair dealing claim arises under Washington
law, her claim relates to Amazon’s performance of the following
term in Amazon’s Conditions of Use: “Amazon does sell products
for children, but it sells them to adults, who can purchase with
a credit card or other permitted payment method.” Doc. no. 25-9
at 3 of 7. Grube has presented no evidence that Amazon acted in
bad faith in carrying out any obligations under that provision.
Because children use Kindle devices, there are opportunities for
them to make in-app purchases. But, as described above, Amazon
provides ample safeguards to ensure that children only make in-
app purchases with an adult’s permission. As Amazon provided
Grube with the tools to prevent her children from making
unauthorized in-app purchases, Amazon did not violate the duty
of good faith and fair dealing under Washington law.
Grube’s claim fares no better under New Hampshire law. In
New Hampshire, there is an implied covenant in every agreement
“that the parties will act in good faith and fairly with one
12 another.” Birch Broad, Inc. v. Capitol Broad. Corp., Inc., 161
N.H. 192, 198 (2010). New Hampshire recognizes the implied
covenant of good faith and fair dealing in three different
contractual contexts: (1) contract formation, (2) termination of
at-will employment agreements, and (3) limitation of discretion
in contractual performance. J & M Lumber & Constr. Co. v.
Smyjunas, 161 N.H. 714, 724 (2011). Grube invokes the third
category here. Whether a plaintiff has sufficiently alleged a
breach under this category turns on three questions: “(1)
whether the agreement allows or confers discretion on the
defendant to deprive the plaintiff of a substantial portion of
the benefit of the agreement; (2) whether the defendant
exercised its discretion reasonably; and (3) whether the
defendant’s abuse of discretion caused the damage complained
of.” Moore v. Mortg. Elec. Registration Sys., Inc., 848 F.
Supp. 2d 107, 129 (D.N.H. 2012) (internal quotation marks and
citation omitted).
Grube contends that to the extent the court determines that
her good faith and fair dealing claim arises under New Hampshire
law, Amazon is liable because it exercised its broad contractual
discretion “unreasonably . . . in ways which resulted in
Plaintiff’s suffering harm.” Doc. no. 29-1 at 5. In support of
her claim, Grube points to the following language in Amazon’s
Conditions of Use: “Amazon reserves the right to refuse service,
13 terminate accounts, remove or edit content, or cancel orders in
its sole discretion.”3 Doc. no. 25-9 at 3 of 7. That
contractual term is, however, wholly unrelated to Grube’s
lawsuit. Grube does not allege anywhere in her complaint that
Amazon unreasonably exercised its discretion to refuse service,
terminate her account, or cancel an order. Rather, her
allegations against Amazon deal with the Kindle’s in-app
purchasing system. There is no evidence that Amazon abused its
contractual discretion in this case. As such, Amazon’s actions
do not give rise to a breach of the implied covenant of good
faith and fair dealing under New Hampshire law.
Accordingly, Amazon is entitled to summary judgment on
Count IV.
II. Claims Against Synchrony
A. Violation of TILA, 15 U.S.C. § 1643 (Count I)
In Count I, Grube brings a claim under TILA, 15 U.S.C. §
1643, alleging that Synchrony impermissibly denied her fraud
claim.4 Grube contends that she is not liable for the in-app
3Grube relies on different language in the Conditions of Use than that she cited supra at 12 with respect to the law of Washington.
4Grube initially brought a second claim in Count I for violation of the Fair Credit Billing Act, 15 U.S.C. § 1666, but she subsequently withdrew that claim. See doc. no. 29-1 at 7; doc. no. 42 at 2.
14 credit card purchases because she did not authorize the
purchases and does not know who made them. “Congress enacted
the credit card provisions of the Truth in Lending Act ‘in large
measure to protect credit cardholders from unauthorized use
perpetrated by those able to obtain possession of a card from
its original owner.’” DBI Architects, P.C. v. Am. Express
Travel-Related Servs. Co., Inc., 388 F.3d 886, 889 (D.C. Cir.
2004) (quoting Towers World Airways Inc. v. PHH Aviation Sys.
Inc., 933 F.2d 174, 176 (2d Cir. 1991)). Except as otherwise
provided in § 1643, “a cardholder incurs no liability from the
unauthorized use of a credit card.” 15 U.S.C. § 1643(d). “The
protections under § 1643, however, apply only to ‘unauthorized
use,’ . . . .” DBI Architects, 388 F.3d at 889.
The parties filed cross motions for summary judgment on
this claim. Their dispute centers on Synchrony’s conclusion
that the credit card charges for in-app purchases were not
unauthorized. Grube argues that the charges were unauthorized
because she did not release her account information to any third
parties or give anyone else permission to make purchases on the
Kindle devices. Synchrony argues that the charges were
authorized because the in-app purchaser had apparent authority
to make the purchases.5
5 Synchrony also argues that 15 U.S.C. § 1643 does not provide cardholders with a private cause of action to seek
15 The parties agree that the court should rule on this issue
as a matter of law because the material facts are not in
dispute. Although questions of apparent authority are typically
fact-laden, courts can resolve them at summary judgment where,
as here, facts are undisputed. See, e.g., Ophthalmic Surgeons,
Ltd. v. Paychex, Inc., 632 F.3d 31, 37 (1st Cir. 2011); Minskoff
v. Am. Express Travel Related Servs. Co., Inc., 98 F.3d 703,
708-09 (2d Cir. 1996); Ocor Prods. Corp. v. Walt Disney Prods.,
Inc., 682 F. Supp. 90, 93 (D.N.H. 1988).
Congress defined “unauthorized use” as “use of a credit
card by a person other than the cardholder who does not have
actual, implied, or apparent authority for such use and from
which the cardholder receives no benefit.” 15 U.S.C. § 1602(p).
Courts have concluded that Congress intended agency law to govern whether use by someone other than the cardholder was authorized, DBI Architects, 388 F.3d at 890; Towers World Airways Inc. v. PHH Aviation Sys. Inc., 933 F.2d 174, 176-77 (2d Cir. 1991), and in its commentary to Regulation Z, the Federal Reserve Board has made explicit that “whether authority exists must be determined under state or other applicable law,” Federal Reserve Board Truth in Lending Official Staff Commentary to Regulation Z, 12 C.F.R. pt. 226, Supp. I § 226.12(b)(1).
reimbursement of payments or damages from a credit card issuer. See Azur v. Chase Bank, USA, Nat’l Ass’n, 601 F.3d 212, 217 (3d Cir. 2010). Without controlling authority on the issue, and following the approach taken by the majority of courts that have addressed the issue, the court assumes, without deciding, that a cardholder can maintain a cause of action under § 1643 against a card issuer. See, e.g., Asher v. Chase Bank USA, N.A., 310 F. App’x 912, 916 (7th Cir. 2009).
16 Asher, 310 F. App’x at 920. Here, the parties dispute whether
New Hampshire or Utah agency law governs the issue of apparent
authority. The issue is immaterial, however, as the court’s
agency analysis is the same under either New Hampshire or Utah
law. See Lambert, 983 F.2d at 1114.
Under both Utah and New Hampshire law, apparent authority
exists when the conduct of a principal causes a third party to
reasonably believe that an agent has authority to act on behalf
of the principal. See, e.g., Grazer v. Jones, 289 P.3d 437, 440
(Utah 2012); Boynton v. Figueroa, 154 N.H. 592, 604 (2006). The
principal’s manifestations of apparent authority need not be
communicated directly to the third-party. See Restatement
(Third) of Agency § 3.03, cmt. b (2006) (“A principal may make
manifestations regarding an agent’s authority in many ways. . . .
[A]n indirect route of communication between a principal and
third party may suffice, especially when it is consistent with
practice in the relevant industry.”). While in-app purchasing
provides a unique paradigm for agency law, the facts of this case
lend itself to such an analysis.
Here, Synchrony concluded that the in-app purchases on
Grube’s Kindles were made by someone who was authorized to do
so. That is, the actions of the principal (Grube) demonstrated
that the agent (the person who made the in-app purchases on the
Kindle devices) had the authority to act on behalf of the
17 principal (Grube). Thus, to determine if apparent authority
existed here, the court must decide whether, construing all
facts in the light most favorable to Grube, Synchrony’s
conclusion was reasonable.
The record evidence shows that Synchrony conducted multiple
investigations of the facts underlying Grube’s claims of fraud.
Each investigation yielded the same result: the charges appeared
authorized by Grube. Synchrony determined that the disputed
charges were all in-app purchases made from and downloaded to
Grube’s own Kindle devices. Grube voluntarily provided her
credit card information to Amazon for purchases from these
Kindles, and linked these devices to her Amazon account. In
other words, Grube voluntarily provided her credit card
information to Amazon for purchases from these Kindles. Knowing
that in-app purchases could be made on the devices, Grube then
voluntarily gave the Kindles to her children. Although Grube
asserted that the in-app purchases were fraudulent, she did not
claim that the Kindles were lost or stolen. Cf. Towers, 933
F.2d at 177 (TILA “precludes a finding of apparent authority
where the transfer of the card was without the cardholder’s
consent, as in cases involving theft, loss, or fraud”).
Viewing those facts in the light most favorable to Grube,
no rational jury could find that Synchrony’s conclusion (i.e.,
that the in-app purchases were made by someone with the
18 authority do so) was anything but reasonable. Thus, the
undisputed facts show that the in-app purchaser had apparent
authority to purchase the apps.
Accordingly, Synchrony is entitled to summary judgment on
Grube’s TILA claim.
B. Violation of UDUCPA, RSA 358-C:3, VII (Count III)
Finally, Grube alleges that Synchrony violated RSA 358-C:3,
VII, in sending out credit card billing statements that
contained unauthorized charges. Under RSA 358-C:3, VII, it is
unlawful for a debt collector to “[m]ake[] any material false
representation or implication of the character, extent or amount
of [a] debt, or of its status in any legal proceeding.” Grube
contends that because certain credit charges were fraudulent,
Synchrony’s billing statements showing those charges constitute
“material false misrepresentations as to the character and
amount of Plaintiff’s debt.” Doc. no. 1 at ¶ 73.
Grube’s UDUCPA claim hinges on the success of her TILA
claim. She argues:
Pursuant to 15 U.S.C. §1643, Plaintiff is not liable for the charges which she did not authorize, therefore, the billing statements attempting to collect the debt for unauthorized charges contain false information.
Doc. no. 29-1 at 7.
19 Because Grube’s TILA claim fails, her UDUCPA claim must
also fail. As explained above, Synchrony acted reasonably in
determining that Grube authorized the disputed credit card
charges. As such, Synchrony was entitled to collect the debt
for those charges. Synchrony made no misrepresentations as to
the character or amount of Grube’s credit card debt.
Accordingly, Synchrony is entitled to summary judgment on Count
III.
CONCLUSION
For the foregoing reasons, Grube’s motion for partial
summary judgment (doc. no. 24) is DENIED and defendants’ motion
for summary judgment (doc. no. 25) is GRANTED. All pending
motions are DENIED as moot. The clerk of court shall enter
judgment accordingly and close the case.
SO ORDERED.
__________________________ Landya McCafferty United States District Judge
September 6, 2017
cc: Kristina Cerniauskaite, Esq. Jeffrey M. Hanson, Esq. Harry H. Schneider, Jr., Esq. Robert A. Stein, Esq.