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Apple to Refund $32.5M for Kids' In-App Purchases

January 16, 2014  |  12:50pm
Apple to Refund $32.5M for Kids' In-App Purchases

Apple has agreed to refund a minimum of $32.5 million to parents over accidental (or, in some cases, malicious) in-app purchases from kids. The refunds are set to be issued to settle a complaint released by the U.S. Federal Trade Commission on Wednesday stating Apple billed consumers for millions of dollars in charges placed by children on mobile apps without parental consent.

In particular, the complaint says Apple violated an FTC Act by not informing parents that entering their password to approve a game download or an initial in-app purchase would allow 15 minutes of additional purchases without another password needed. “Apple’s in-app purchase screen prompts for a password but doesn’t reveal that the password opens the door for those extra fifteen minutes,” the FTC said.

Under the terms of the settlement, Apple will also be required to change its billing practices, which will now notify parents of the 15-minute window that allows further app purchases after a password is entered.

The FTC statement shows where one parent learned from her credit card bill that her daughter had charged $2,600 in the “Tap Pet Hotel.” Another consumer reported that her niece charged over $100 playing “Racing Penguin, Flying Free.” She said her niece didn’t know her iTunes password, but made the charges inside the 15-minute window.

Another parent, whose 7-year-old racked up over $500 in charges playing “Tiny Zoo Friends,” an app where the player uses “Zoo Bucks” to advance further in the game, argued that “children…cannot possibly understand that they are spending real money.”

“You cannot charge consumers for purchases they did not authorize,” FTC Chairwoman Edith Ramirez told The Associated Press.

Apple chief executive Tim Cook wrote in a memo to employees that the company has already been following the FTC’s requests.

“The consent decree the FTC proposed does not require us to do anything we weren’t already going to do, so we decided to accept it rather than take on a long and distracting legal fight,” Cook wrote.

He said the company sent emails to over 28 million iTunes App Store customers offering refunds. When some emails bounced, “we mailed the parents postcards.”

“In all, we received 37,000 claims and we will be reimbursing each one as promised,” Cook wrote.

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