Apple is set to pay at least $32.5m to consumers to settle a federal complaint about the company’s practices that allowed children to make purchases in mobile apps without parents' permission, the government announced on Wednesday.
The Federal Trade Commission said Apple will provide a full refund for in-app purchases made without permission from account holders. The agency said it had received “at least tens of thousands of complaints” about such purchases and one parent said her child spent more than $2,600 in the Tap Pet Hotel app.
Apple CEO Tim Cook said that the company had been working to refund customers affected by these type of purchases since last year in an emailed memo to employees obtained by 9to5Mac. Cook also criticized the FTC’s intervention in the case and said that Wednesday’s agreement with the FTC “smacked of double jeopardy” because the case had already been settled.
“However, 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 said.
As part of the agreement, Apple must change its purchasing process to ensure consumers give full consent when purchasing items in mobile apps. In-app items can range from 99 cents to $99.99 per item.
The FTC said Apple failed to inform consumers that they could be approving in-app purchases by entering a password on their device. After entering the password, users then had a 15-minute window where unlimited purchases could be made without further action taken by users.
“Although Apple adjusted certain screens in response and offered refunds, it still failed to notify account holders that by entering their password they were initiating a 15-minute window during which children using the app could incur charges without further action by the account holder,” FTC commissioner Maureen Ohlhausen said in a statement.
“Even if Apple chose to forgo providing this information – the type of information that is critical for any billing platform, no matter how innovative, to provide – in favor of what it believed was a smoother user experience for some users, the result was unfair to the thousands of consumers who subsequently experienced unauthorized in-app charges totaling millions of dollars.”
Apple is required to alert all users who may have experienced accidental or not authorized in-app purchases before 31 March 2014 that refunds are available. If the company issues less than $32.5m to consumers it is required to pay the remaining balance to the FTC.