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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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