Apple to Issue Refunds on Kids App Purchases

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// January 17, 2014
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Parents Rejoice, you get money back on your unauthorized kids app purchases.

The FTC has ordered Apple to refund at least $32.5 million to customers whose children made in-app purchases without their consent. As part of the settlement agreement Apple will also change it’s billing methods to ensure that all purchases have expressly informed consent by the account owner.

The FTC had received thousands of complaints, from parents, about unauthorized in-app purchases made by their children, in some cases totally several thousand dollars. The FTC cited several different cases including one where a child spent $2,600 on the application “Tap Pet Hotel,” other commonly cited cases included the apps “Dragon Story” and “Tiny Zoo Friends,” where the average expenditure was several hundred dollars.

When consumers purchase apps they must enter a password, however, Apple does not tell consumers that after the password has been entered there is time frame of 15 minutes during which additional purchases can be made without entering the password.

Edith Ramirez, FTC Chairwoman stated, “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. You cannot charge consumers for purchases they did not authorize.”

After the FTC announcement Apple made their own statement, acknowledging the need to enforce stricter security measures. “Protecting children has been a top priority for the App Store from the very beginning, and Apple is proud to have set the gold standard for online stores by making the App Store a safe place for customers of all ages. Today’s agreement with the FTC extends our existing refund program for in-app purchases which may have been made without a parent’s permission.”

Apple billing practices will be revised by March 31st . The new billing will require consent for all in-app purchases, and will allow consumers the option to withdraw their consent at any time.

Apple CEO Tim Cook said that Apple had been negotiating with the FTC for quite a while and that the settlement does not require anything different than what they had already planned. In a previous memo to employees he stated, “ Last year, we set out to refund any in-app purchase which may have been made without a parent’s permission. We wanted to reach every customer who might have been affected, so we sent emails to 28 million App Store customers – anyone who had made an in-app purchase in a game designed for kids. 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.”

So if your kid has been making purchases, better stand in line.

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