Apple Ordered to Pay Parents in App Case
January 16, 2014 Leave a comment
Tech giant Apple Inc. was ordered to refund $32.5 million to consumers who let their children make in-app purchases without their parents consent.
FTC Commissioner Edith Ramirez ruled that Apple failed to notify users that an additional 15-minute window was open to make purchases after entering a password. Children would take advantage of this without their parents’ knowledge. These charges ranged from 99 cents to $99.99 per charge.
“The settlement is a victory for consumers harmed by Apple’s funfair 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 protection apply,” said Ramirez. “You cannot charge consumers for purchases they did not authorize.” Apple agreed to provide full refunds to all affected consumers.
If the refunds do not reach $32.5 million, the rest of the balance that Apple would have to pay would go to the FTC. Apple will be required to change its billing system to make sure content is accepted from consumers before charging within an app. Apple said in a memo to employees on Wednesday that they had received 37,000 claims from unhappy parents.
The problems started after a software update for Apple’s mobile devices in 2011. A password to make in-app purchases was required, but users were still given 15 minutes to make another purchase before the password was required again. Apple has already settled a lawsuit over parents letting their children rack up charges without their permission.
Customers spent $10 billion on apps in Apple’s App Store in 2013. Apple CEO Tim Cook explained that the company settled, rather than risk a legal battle. The FTC’s proposal aligned with the company’s own intended changes.
“Protecting children has been a top priority for the App Store from the very beginning, and Apple is proud to have set the gold standard for online stores by making the App Store a safe place for customers of all age,” said Steve Dowling, a spokesman for Apple.