Apple has agreed to settle a Federal Trade Commission (FTC) complaint by refunding at least $32.5 million dollars to customers. The settlement also requires that Apple change its billing practices and obtain consent for mobile in-app purchases.
As the FTC announced Wednesday (Jan. 15), Apple was in violation of the FTC Act by failing to provide parents with detailed information about in-app purchase within mobile apps for kids. The FTC complaint alleges that Apple withheld the fact that a one-time app authorization of a kids mobile app also approved an added 15 minutes of unlimited purchases.
App Store kids games including “Tap Pet Hotel” and “Tiny Zoo Friends” lets users buy additional items from within the app. Charges for in-app purchases can range from $1 dollar to $100 dollars and add up fast when kids are doing the purchasing. The FTC notes that kids spent thousands of dollars on virtual items or currency offered as purchases within the apps. “One consumer reported that her daughter had spent $2,600 on “Tap Pet Hotel”,” the FTC said.
Parents who incurred unauthorized charges as a result of their kids’ in-app shopping sprees can expect full refunds from Apple. “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,” FTC Chairwoman Edith Ramirez said in a statement Wednesday. “You cannot charge consumers for purchases they did not authorize,” Ramirez said.
Apple is required to refund a combined total of no less than $32.5 million dollars to customers who incurred charges by accidental or unauthorized kids purchases. Refunds must be issued promptly upon request from account holders. Apple has up until March 31, 2014 to revise its billing practices and obtain expressed consent from customers for in-app purchases prior to billing.