FTC Calls Apple Settlement Over Kids' In-App Purchases 'A Victory'

23 Jan, 2014 By: Chris Tribbey

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Edith Ramirez, chairwoman of the Federal Trade Commission (FTC), put it simply: “You cannot charge consumers for purchases they did not authorize.”

And while Apple didn’t agree with her and the FTC’s ruling, it will be paying at least $32.5 million in refunds of mobile in-app purchases children made without their parents’ consent.

The ruling closes an FTC complaint that alleged Apple violated the FTC Act, failing to disclose to parents that by entering a password, they were approving a single in-app purchase along with 15 minutes of additional unlimited purchases, which lots of children took advantage of, buying in-app, virtual items ranging from 99 cents to $100.

The complaint said Apple didn’t inform account owners of the 15-minute window in which kids incurred unlimited charges. The ruling will also see Apple change its billing practices, to ensure consumers give express consent before they’re charged for items sold via mobile apps.

“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,” Ramirez said.

The FTC complaint relayed “tens of thousands” of consumer complaints about unauthorized in-app purchases, with one parent saying her daughter spent approximately $2,600 in the app “Tap Pet Hotel.” Other consumers reported unauthorized purchases by kids totaling more than $500 in the “Dragon Story” and “Tiny Zoo Friends” apps.

Apple will be changing its billing by April and offering refunds within the next year.

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