Apple to refund at least $32.5 mn to parents over in-app purchases
16 Jan 2014
The US federal government yesterday said Apple had agreed to pay at least $32.5 million in refunds to parents who did not authorise the the heavy bills their children had run up on online with their iPhones and iPads.
The settlement of the Federal Trade Commission with the iPhone maker is the first punishment of the kind handed to a major tech company in the matter of the purchase of children's apps.
The development comes as concerns grow that even as children increasingly use mobile devices, companies were not doing enough to protect their privacy or provide parents with the tools to supervise online behavior.
Apple's agreement with FTC covers sales made to children without consent from their parents.
The FTC took up investigations nearly three years ago following a flurry of consumer complaints from parents surprised by the steep charges on their credit cards when their children used games such as Tap Pet Hotel and Smurf's Village.
The parents took up the matter with regulators and joined a separate class-action lawsuit against Apple for approving games in its iTunes store that enticed children to buy virtual coins or ''smurfberries'' for real money to the tune of $500 per item - without ensuring the games had safeguards.
The FTC's argument is based on the fact that Apple stored a user's password for 15 minutes, which allowed a consumer to make purchases in that 15-minute window without having to reenter their password for each purchase. However, that policy was in violation of federal rules which stipulated that a consumer needed to be made aware of such a policy.
According to the FTC, many consumers were not aware, as was evident from the tens-of-thousands of complaints from parents. Apple would be responsible for working out an arrangement for parents to apply for those refunds.
Under the terms of the FTC's settlement with Apple, the company would also need to change the way in-app purchases were made so consumers were aware they were actually buying something each and every time.
