The situation has become so serious that Amazon says it’s prepared to go up against the FTC in court to defend its current practices, documents obtained by the Wall Street Journal have revealed. If it lost the legal battle, the company could be hit by large fines as well as an order to change company policies and procedures regarding such purchases.

The documents indicate the FTC wants Amazon to make it harder for children to make in-app purchases when visiting Amazon’s app store on a mobile device.

However, in a letter to the regulator, Amazon claims it already clearly indicates when in-app purchases are available and says it also offers a refund if a parent complains their child has made a purchase without their permission.

The FTC is demanding that Amazon introduce passwords for in-app purchases, and clearer notices indicating that such purchases are available. According to a Reuters report Wednesday, the FTC says parents requesting a refund face “significant hurdles to doing so,” and is demanding Amazon change its ways in light of the “thousands” of complaints made by parents regarding unauthorized in-app purchases.

Unless Amazon has a change of attitude and reaches a settlement with the FTC, the case is likely to end up in court with the Web giant having to convince a judge that its current procedures are adequate.

Sound familiar?

As you may recall, Apple found itself in a similar position with the trade commission at the start of the year. The Cupertino company agreed to refund customers to the tune of $32.5 million for in-app purchases made without parents’ consent. It also overhauled its billing practices and began indicating more clearly when in-app purchases were available.

In addition, Google recently made several changes to its Google Play store to make it harder for children to make in-app purchases without permission.

With Amazon on the verge of launching its first ever smartphone – a device, like the Kindle Fire tablets, offering easy access to Amazon’s app store – the FTC will be keen for the e-commerce company to comply with its demands sooner rather than later.

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