Apple CEO Tim Cook speaks about the number of Apps downloaded during a March 2012 event in San Francisco. REUTERS/Robert Galbraith/Files
Apple has reached a $US32.5 million settlement with the
Federal Trade Commission over unauthorized purchases made
within smartphone and tablet apps.
The settlement requires Apple - maker of the iPad and iPhone
- to offer full refunds "for any charges by a minor that are
unauthorized," FTC Chairwoman Edith Ramirez said in a press
The deal also mandates Apple updates its billing practices to
ensure it has express content from users before charging them
for content within 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,"
The deal stems from purchases made within apps by kids using
a smartphone or tablet. In most cases, the purchases are
racked up without their parents' consent.
Many mobile games and apps offer items such as in-game
currency that users can buy from within the app instead of
Apple's App Store. The price of these in-app purchases range
from 99 cents to $100.
Ramirez cites the example of one consumer whose daughter
spent $2600 on in-app purchases from the game Tap Pet Hotel.
The FTC complaint also claims Apple does not inform consumers
of a 15-minute window opened after a user enters that
password that allows for unlimited purchases on the App Store
or within apps.
In an employee memo obtained by several tech sites including
Re/code, Apple CEO Tim Cook says emails were sent last year
to 28 million App Store customers, and sent refunds off
"It doesn't feel right for the FTC to sue over a case that
had already been settled," reads an excerpt of Cook's memo.
"To us, it smacked of double jeopardy. 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."