Apple Ordered to Refund Consumers for Unauthorised In-App Purchases
Published on: 15th Jan 2014
Apple has agreed to refund customers with at least US$32.5 million worth of mobile app purchases in order to settle a Federal Trade Commission investigation into how children were able to make in app purchases without their parents' consent.
Apple also will be required to change its billing practices to ensure that it has obtained express, informed consent from consumers before charging them for items sold in mobile apps.
"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 Chairwoman Edith Ramirez.
In its complaint, the FTC notes that Apple received tens of thousands of complaints about unauthorized in-app purchases by children.
One consumer reported that her daughter had spent $2,600 in the app "Tap Pet Hotel," and other consumers reported unauthorized purchases by children totaling more than $500 in the apps "Dragon Story" and "Tiny Zoo Friends." According to the complaint, consumers have reported millions of dollars in unauthorized charges to Apple.
The FTC's complaint alleges that Apple violated the FTC Act by failing to tell parents that by entering a password they were approving a single in-app purchase and also 15 minutes of additional unlimited purchases their children could make without further action by the parent.
In addition, according to the complaint, Apple has often presented a screen with a prompt for a parent to enter his or her password in a kids' app without explaining to the account holder that password entry would finalize any purchase at all.
The settlement requires Apple to modify its billing practices to ensure that it 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 this coming April.
Under the settlement, Apple will be required to provide full refunds, totaling a minimum of $32.5 million, to consumers who were billed for in-app charges that were incurred by children and were either accidental or not authorized by the consumer. Apple must make these refunds promptly, upon request from an account holder. Apple is required to give notice of the availability of refunds to all consumers charged for in-app charges with instructions on how to obtain a refund for unauthorized purchases by kids.
Should Apple issue less than $32.5 million in refunds to consumers within a year after the settlement becomes final, the company must send the balance to the Commission.