Terms of a settlement between Apple Inc. and the Federal Trade Commission require Apple to provide full refunds to consumers, paying a minimum of $32.5 million, to settle charges that it billed consumers for millions of dollars of charges incurred by children in kids mobile apps without their parents consent.
Apple also 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.
This settlement is a victory for consumers harmed by Apples unfair billing, and a signal to the business community: whether youre doing business in the mobile arena or the mall down the street, fundamental consumer protections apply, said FTC Chairwoman Edith Ramirez. You cannot charge consumers for purchases they did not authorize.
The FTC's complaint alleges that Apple violated the FTC Act by failing to tell parents that by entering a password they were approving a single in-app purchase and also 15 minutes of additional unlimited purchases their children could make without further action by the parent.
Apple offers many kids apps in its App Store that allow users to incur charges within the apps. Many of these charges are for virtual items or currency used in playing a game. These charges generally range from 99 cents to $99.99 per in-app charge.
The complaint alleges that Apple does not inform account holders that entering their password will open a 15-minute window in which children can incur unlimited charges with no further action from the account holder.
In addition, according to the complaint, Apple has often presented a screen with a prompt for a parent to enter his or her password in a kids app without explaining to the account holder that password entry would finalize any purchase at all.
The rapidly expanding mobile arena has been a focus of the FTC's consumer protection efforts. In its complaint, the FTC notes that Apple received at least tens of thousands of complaints about unauthorized in-app purchases by children. One consumer reported that her daughter had spent $2,600 in the app Tap Pet Hotel, and other consumers reported unauthorized purchases by children totaling more than $500 in the apps Dragon Story and Tiny Zoo Friends. According to the complaint, consumers have reported millions of dollars in unauthorized charges to Apple.
The settlement requires Apple to modify its billing practices to ensure that Apple obtains consumers express, informed consent prior to billing them for in-app charges, and that if the company gets consumers consent for future charges, consumers must have the option to withdraw their consent at any time. Apple must make these changes no later than March 31.