Apple will pay at least $32.5 million and change its billing practices in order to settle complaints over children racking up in-app purchases in iPhone games without their parents consent. The Federal Trade Commission announced the agreement today.
The $32.5 million figure is a minimum refund amount to consumers and not a fine. Last summer, Apple settled a class action lawsuit in which it promised to refund purchases made by children either mistakenly or without consent. The deadline for making those claims expired on Monday.
In an internal memo sent to Apple employees today, CEO Tim Cook said the FTC's complaint "smacked of double jeopardy," and noted that the agreement "does not require us to do anything we weren't already going to do." That is why the company chose to settle the complaint, he said.
Apple, says the FTC, "will be required to change its billing practices to ensure that it has obtained express, informed consent from consumers before charging them for items sold in mobile apps."
The company had long fielded complaints from parents who discovered their kids had racked up huge bills for in-app purchases that needed little, if no verification to complete.
By March 31, Apple must not only ensure that it has customers' consent prior to billing them for in-app purchases, but also "if the company gets consumers' consent for future charges, consumers must have the option to withdraw their consent at any time."
The FTC alleged Apple violated the law by failing to notify parents that by entering a password, not only were they approving the immediate in-app purchase, but all in-app purchases made for the next 15 minutes, without additional action.
"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. "You cannot charge consumers for purchases they did not authorize."
Apple Inc. Will Provide Full Consumer Refunds of At Least $32.5 Million to Settle FTC Complaint It Charged for Kids' In-App Purchases Without Parental Consent [FTC]
image via The Examiner