Apple, FTC settle over in-app purchases by minors

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Parents whose kids have racked up accidental in-app purchase charges now have recourse from the U.S. government, thanks to a settlement between Apple and the Federal Trade Commission. Published on Wednesday, the agreement lays out changes for how Apple’s in-app purchases are communicated to users, as well as a minimum of $32.5 million in refunds to eligible consumers.

The in-app purchase dispute first came to light in 2010, with reports from parents whose children had, in some cases, accrued hundreds or thousands of dollars of in-app charges. Such purchases were enabled due to the fact that, after entering one’s iTunes Store password, further purchases could be made within a 15-minute window without the need to re-enter the password. Though Apple revised that feature in March 2011, the FTC had already intervened at the behest of then Massachusetts Representative Edward Markey.

Under the terms of the settlement with the FTC, Apple admits no wrongdoing, but agrees to revise its in-app purchase system to clarify its billing practices, including providing clear information about what is being purchased, requiring express consent of all purchases, and allowing consumers to withdraw that consent at any time.

Apple is also required to refund consumers a minimum of $32.5 million in mistaken in-app purchases by minors. If the company doesn’t issue refunds for at least that much, the shortfall will be deposited in a fund administered by Congress for these purposes (or, failing that, into the U.S. Treasury it goes). Eligible consumers—those who’ve made a mistaken in-app purchase before March 31, 2014—will be notified by the middle of April.

Separately, Apple in February of 2013 settled a class action lawsuit over in-app purchases, as part of which it paid out cash and credits to affected consumers.

The FTC commissioners voted 3-to-1 in favor of its settlement, with one dissenting opinion from Commissioner Joshua Wright, who argued that the injury in question affected only a small percentage of customers and is outweighed by the benefits to consumers.

As of Wednesday, the settlement is open to public comment for 30 days, after which the Commission has the option to withdraw it or put it into effect.

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