Amazon has been ordered by a federal judge to begin an extended process that will reimburse parents for in-app purchases their children made without permission, although the judge rejected calls by the Federal Trade Commission for Amazon to make a $26.5m lump-sum payout.

The case dates back to July 2014, when the FTC accused Amazon of making it too easy for children to run up large bills while playing games on mobile devices, and failing to provide adequate parental controls.

According to the FTC, in-app payments totalling an estimated $86m were charged without authorisation before Amazon updated its parental controls.

The court order calls for Amazon to set up a notice-and-claims process that will begin in early 2017, designed to notify parents of their eligibility for refunds and issue reimbursement for any unauthorised payments.

US District Judge John Coughenour said the claims process “removes the uncertainty of the proper lump sum amount that the parties have vigorously disputed. Moreover, it accomplishes the goals of placing liability on Amazon and refunding eligible customers.”

Coughenour agreed with Amazon that the FTCs initial damages request was too high, but denied the retailers request to issue refunds in the form of gift cards, saying the company would “undoubtedly recapture some of the profits that are at issue.”