Apple Inc. will be providing refunds to consumers who had purchases made without parental consent. A release from the Federal Trade Commision on Jan. 15 states that Apple has agreed to a settlement and will end up paying, at minimum, $32.5 million.
The FTC complaint was that the company was billing customers millions of dollars for purchases made by children or otherwise without their consent. Along with the settlement, Apple will change its billing practices to ensure that parents will have to demonstrate informed consent before Apple can issue a charge.
The source of the issue comes down to the password. The FTC says that Apple violated the FTC Act by not stating that a password was serving as their consent and Apple could finalize a purchase. Once a password was entered, a purchase could be approved. However, any purchase made within 15 minutes of the first purchase would also be approved with no further password needed.
Purchases weren’t only for apps; many were in-app purchases, such as for virtual currency used inside a game. These charges ranged from $.99 to $99.99 per charge.
FTC Chairwoman Edith Ramirez commented, “This settlement is a victory for consumers harmed by Apple’s unfair billing, and a signal to the business community: whether you’re doing business in the mobile arena or the mall down the street, fundamental consumer protections apply. You cannot charge consumers for purchases they did not authorize.”
The changes Apple will make must be finalized no later than March, 31 of this year. Apple must now get full consent for in-app purchases and allow consumers to withdraw their consent from future charges.
In issuing refunds, Apple must make it expressly clear how to obtain a refund. If Apple issues less than the stated $32.5 million in refunds, the leftover money will be given to the FTC.