UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Carrie Grube

v. Civil No. 16-cv-126-LM Opinion No.

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.,

(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.,

(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,

(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,

, 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”),

(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.

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.,

(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.”

(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,

(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,

. 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,

(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.,

(Wash. 2014) (quoting Badgett

v. Sec. State Bank,

(Wash. 1991)). The duty,

11 however, does not “inject substantive terms into the parties’

contract.” Badgett,

. Rather, the duty

“requires only that the parties perform in good faith the

obligations imposed by their agreement.”

Accordingly, the

duty is not “free-floating,” but “exists only in relation to

performance of a specific contract term.”

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.,

(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,

(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.,

(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,

(Count I)

In Count I, Grube brings a claim under TILA,

, 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,

, 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.,

(D.C. Cir.

2004) (quoting Towers World Airways Inc. v. PHH Aviation Sys.

Inc.,

(2d Cir. 1991)). Except as otherwise

provided in § 1643, “a cardholder incurs no liability from the

unauthorized use of a credit card.”

(d). “The

protections under § 1643, however, apply only to ‘unauthorized

use,’ . . . .” DBI Architects,

.

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

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.,

(1st Cir. 2011); Minskoff

v. Am. Express Travel Related Servs. Co., Inc.,

(2d Cir. 1996); Ocor Prods. Corp. v. Walt Disney Prods.,

Inc.,

(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.”

(p).

Courts have concluded that Congress intended agency law to govern whether use by someone other than the cardholder was authorized, DBI Architects,

; Towers World Airways Inc. v. PHH Aviation Sys. Inc.,

(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,

(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.,

(7th Cir. 2009).

16 Asher,

. 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,

.

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,

(Utah 2012); Boynton v. Figueroa,

(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,

(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

, 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.

20