Apple has agreed to refund $32.5 million to consumers for accidental in-app purchases to settle a federal case with the Federal Trade Commission.
The settlement comes after the FTC complained that Apple billed parents for millions because of their children making purchases through apps without their consent. Most of these apps were children’s games that can be downloaded for free, and while in-app purchases usually cost any where from $1 to $100, they can do damage on unsuspecting parents, writes privacy lawyers Julia Siripurapu and Cynthia Larose for Privacy & Security Matters.
The financial injury in this case isn’t speculative. According to the complaint, one mother reported that her daughter’s clicks resulted in $2600 in unauthorized purchases in the “Tap Pet Hotel” app. Others reported $500 in surprise in-app charges when kids played “Dragon Story” and “Tiny Zoo Friends.
Apple requires password authorization for purchases and downloads, but typing it in once opens a 15-minute window, which the complaint says is when charges happened. The tech giant will also have to change that, according to the FTC.
The settlement requires Apple to modify its billing practices to ensure that Apple obtains consumers’ express, informed consent prior to billing them for in-app charges, and that if the company gets consumers’ consent for future charges, consumers must have the option to withdraw their consent at any time. Apple must make these changes no later than March 31, 2014.
This is not the first time that Apple has agreed to settle because of accidental in-app purchases, which they have been aware of since 2011. In 2013, Apple agreed to “issue $5 in iTunes credit to affected customers. If customers racked up more than $5 in in-app charges, Apple will issue up to $30 in iTunes credit. Apple will issue cash refunds for accounts that spent more than $30,” and they sent notices to 23 million customers, wrote telecom lawyers Nickolas Milonas and Marc Martin at K&L Gates.
In a memo from Apple CEO Tim Cook uncovered by tech news site Recode, the company will honor but not without some grumbling.
A federal judge agreed with our actions as a full settlement [for the 2013 lawsuit] and we felt we had made things right for everyone. Then, the FTC got involved and we faced the prospect of a second lawsuit over the very same issue.
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. 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.
The FTC is still accepting public comment on the settlement and said that the $32.5 million is only a minimum.