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Apple offers $32.5 million in refunds to settle FTC IAP complaint
Apple offers $32.5 million in refunds to settle FTC IAP complaint
January 16, 2014 | By Alex Wawro

The FTC released a statement today confirming that Apple has agreed to refund at least $32.5 million to anyone bilked by free apps that trick kids into spending money without the informed consent of the account holder.

These refunds are to be made available to any Apple account holder who can prove they were billed for in-app purchases made by children without their knowledge or consent.

Apple is also required to modify its billing practices to make it more difficult for this sort of thing to happen in the future. Apple devices must be modified before March 31, 2014 to obtain clear consent from users before billing them for any in-app charges.

The agreement is open to public comment for 30 days before the FTC must decide whether to implement it. Apple should start offering refunds once the agreement is final, and the company will have a year to refund at least the full $32.5 million to customers or else remit the remaining amount to the FTC.

The FTC opened a formal complaint against Apple after a gaggle of frustrated parents complained about being bilked out of hundreds or even thousands of dollars by kid-friendly apps with deceptive IAP systems distributed on Apple's app store. The complaint alleged that Apple failed to inform parents that by entering their Apple ID password they were approving not just a single in-app purchase, but also a 15-minute window during which kids could make unlimited additional in-app purchases without needing to re-type the password.

If this sounds familiar, it's because many angry parents also filed class action lawsuits against Apple in 2011 over the same issue. The company went on to offer a settlement whereby the company would pay back any parent who could prove their child made in-app purchases using their account without their informed consent. That reimbursement process began in 2013, and is separate from the company's agreement with the FTC.

An internal Apple memo from CEO Tim Cook to employees stated, "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."

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SD Marlow
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"Apple devices must be modified..." makes it sound like a hardware problem, lol. I'm actually curious about the specific "kids apps" that are flashing the "buy this" "buy this" "buy this" so often and for so much that hundreds of dollars in charges can be made in such a short time. I can see a child running to a parent 20 times a day saying they have to ok a purchase, or want to buy something, but then it's that parents fault for just signing-off on everything without actually looking at the total cost.

This is not Apples fault directly, but they do have a financial incentive to keep such problem apps on iTunes (even if there are warnings to app makers about "predatory" IAP).

Katy Smith
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I think the thing that they focused in on is that once you enter a password, it stays "open" for 15 minutes. So if a kid were to spam the wagon of Smurfberries button, he could get quite a bill in only a few minutes.

Jean Louis
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This is why my children have an Android tablet that has had everything removed except a calculator, a clock, and the Kindle app. I have never understood unleashing children on technology, on which they can so easily become dependant. Not to pull a Cliff Huxtable moment, but one of the best rules my parents ever had when I was growing up was that to watch a movie or play 2 hours of Nintendo each week, each participating child had to read 200 pages of books with no pictures, renewable up to one additional movie or 2 hour period, and this was per week and only redeemable on weekends. This rule started when I was 8 and continued until I was 15/16, and the worlds that I encountered in this fashion were so much richer than any I've encountered in movies or games, even in games that I love like Morrowind. Seriously, I have an iPad for my wife and for myself and am the last to defend Apple in most circumstances, but learn to pay attention to your child and teach them responsibility at an early age. It's so much harder a lesson to learn later in life. /rant