Apple settles with FTC on in-app purchases – Mobile World Live

Apple settles with FTC on in-app purchases

16 JAN 2014

Apple settled a dispute concerning in-app purchasing with the US Federal Trade Commission (FTC), in which it agreed to refund a minimum of $32.5 million for in-app purchases made by children without parental consent.

Under the terms of the deal, Apple must change its billing practices by 31 March, so that informed consent from consumers is obtained before they are charged for items bought within apps. Consumers must be able to withdraw their consent at any time.

Apple must also give notice of the availability of refunds and how consumers can obtain them. The refunds should be made promptly following a request.

If Apple fails to repay $32.5 million within 12 months, it must pay the balance to the FTC.

FTC chairwoman Edith Ramirez described the settlement as “a victory for consumers harmed by Apple’s unfair billing”.

“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 authorise,” she added.

The FTC alleged that Apple violated the FTC Act by failing to tell parents that entering a password will allow 15 minutes of unlimited in-app purchases without further action from them.

The complaint also said Apple often presented a password prompt in apps aimed at children, without explaining that entering the password would finalise any payment.

According to the FTC, Apple received tens of thousands of complaints about unauthorised app purchases by children. One consumer said their daughter spent $2,600 in a single app, while several others saw unauthorised purchases totalling more than $500.

In a letter sent to the company’s employees (seen by 9to5 Mac), Apple CEO Tim Cook said protecting children is a priority for Apple, noting that the App Store has industry-leading controls for security and privacy.

The safeguards in place for in-app purchases are outlined in the letter, while Cook also noted the ways in which Apple has helped customers who have lost out through in-app purchases.

The company sent emails to 28 million App Store customers whose accounts showed in-app purchases made in games designed for children. As a result the company received 37,000 claims, all of which will be reimbursed.

Apple introduced a Kids category in the App Store in September last year to better cater for younger consumers, following concern about the use of apps by children. It also added new rules to its iOS developer guidelines in preparation for the new category.

In March, the company settled a lawsuit filed by a group of parents claiming that its App Store purchasing policies allowed children to spend large amounts of money too easily when unsupervised.

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Tim Ferguson

Tim joined Mobile World Live in August 2011 and works across all channels, with a particular focus on apps. He came to the GSMA with five years of tech journalism experience, having started his career as a reporter... More

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