Apple Settles FTC Dispute for $32.5M

Apple has agreed to refund at least $32.5 million to parents of children who made in-app purchases without the consent of mom and dad. The refund will settle a Federal Trade Commission (FTC) complaint about the practice.

Under the terms of the FTC settlement, Apple also will be required to change its billing practices to make sure it obtains express, informed consent from consumers before charging them for items sold in mobile apps.

EUThis settlement is a victory for consumers harmed by AppleEUs unfair billing, and a signal to the business community: whether youEUre doing business in the mobile arena or the mall down the street, fundamental consumer protections apply,EU said FTC chairwoman Edith Ramirez. EUYou cannot charge consumers for purchases they did not authorize.EU

Violating FTC Act

HereEUs the backstory: The FTCEUs complaint alleges that Apple violated Section 5 of the FTC Act by failing to tell parents that by entering passwords they were approving single in-app purchases as well as 15 minutes of additional unlimited purchases their children could make without further action by the parents.

Apple offers many kidsEU apps in its App Store that allow users to incur charges within the apps. Many of these charges are for virtual items or currency used in playing a game. These fees generally range from 99 cents to $99.99 per in-app charge.

The complaint alleges that Apple does not inform account holders that entering their passwords will open a 15-minute window in which children can incur unlimited charges with no further action from the account holders. WhatEUs more, the complaint alleges Apple has often presented a screen with a prompt for a parent to enter his or her password in a kidsEU app without explaining to the account holder that password entry would finalize any purchase at all.

Running Up a Bill

We caught up with...

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