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Apple required to pay at least $32.5 million in refunds over in-app purchases

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On Wednesday, the Federal Trade Commission (FTC) cracked down on Apple in a decision that will make it pay at least $32.5 million in refunds to customers.

The problem arose three years ago after parents were surprised to have racked up hundreds, if not thousands, of dollars worth of in-app purchases from their iOS devices. Turns out, Apple had allowed unlimited purchases for a 15-minute time period after the app had been downloaded. This led to kids buying enormous amounts of virtual money in various games without their parents' consent.

The FTC ruled that Apple had deceived customers by not notifying them of this feature. Usually, in-app purchases require a password to safeguard against the issue of unauthorized purchases, but this 15-minute period allowed crafty (or innocent) kids to shop virtually to their heart's content.

At a news conference in Washington, FTC Chairwoman Edith Ramirez said:

A basic principle of consumer protection is that a company must obtain a consumer’s informed consent before charging them for any goods and services. Apple fell short on that principle.

The company added:

Apple is proud to have set the gold standard for online stores by making the App Store a safe place for customers of all ages. Today’s agreement with the FTC extends our existing refund program for in-app purchases which may have been made without a parent’s permission.

Apple had already been confronted with this issue previously, and in March 2011, they got rid of the 15-minute period for unlimited purchases. However, today the FTC took the ruling to the next level by forcing Apple to fully refund all unauthorized payments to customers. If you are part of the group of people whose children made these unauthorized purchases, you just need to notify Apple and they will refund all of the charges, without a cap. According to the company, they have sent over 23 million notifications to customers who may have been affected and have received 37,000 claims for full refund.

According to the FDC, the total amount of the unauthorized charges totals at least $32.5 million, if not more, and if the company's payments don't reach $32.5 million, the FDC will collect the difference.

Do you think Apple has been dealt a just punishment for their lack of transparency? Leave your thoughts in the comments section below!

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