Apple has agreed to pay a minimum of US$32.5 million in order to settle a Federal Trade Commission (FTC) complaint, refunding costs incurred by children purchasing in-app upgrades from the App Store.
“This settlement is a victory for consumers harmed by Apple’s unfair billing, and a signal to the business community: whether you’re doing business in the mobile arena or the mall down the street, fundamental consumer protections apply,” said FTC chair Edith Ramirez.
Apple offers a vast number of in-app purchases within children’s games on its iOS devices. These purchases are used to acquire virtual items or to unlock otherwise hidden features.
“In its complaint, the FTC notes that Apple received at least tens of thousands of complaints about unauthorized in-app purchases by children,” said a statement by the trade body.
The FTC alleges Apple failed to notify parents purchases made within a 15-minute period only need to be approved with one password entry. As a result parents have authorised one purchase followed by an unlimited number made by their children in the ensuing 15 minutes.
“You cannot charge consumers for purchases they did not authorise,” said Ramirez.
One Apple user reported her daughter had spent over US$2,600 in the game “Tap Pet Hotel”, while others claimed the apps “Dragon Story” and “Tiny Zoo Friends” had cost them over US$500.
Additionally the FTC said the screen prompting the parent to enter their password makes no mention of an amount being charged to the accountholder.
Apple’s settlement includes refunds for the in-app purchases as well as requiring the company to modify its billing procedures, making sure a user’s express permission is given before any purchases are made.
Reuters reported Tim Cook, chief executive officer (CEO) of Apple, responded to the FTC in an employee memo by referring to a class action settlement in June last year that required the company to pay US$100 million to parents whose children had made purchases that were not authorised.
“It doesn’t feel right for the FTC to sue over a case that had already been settled. To us, it smacked of double jeopardy,” said the Apple CEO in the memo.
“However, the consent decree the FTC proposed does not require us to do anything we weren’t already going to do, so we decided to accept it rather than take on a long and distracting legal fight.”
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