Apple agrees to refund parents US$32.5m for kids’ in-app purchases

16 Jan 2014

The US Federal Trade Commission has ordered Apple to refund parents at least US$32.5m after they were charged when their kids clicked on purchases in mobile apps without their permission.

Apple has agreed to refund the parents and will also be required to change its billing practices to ensure it has obtained express, informed consent from consumers before charging them for items sold in mobile apps, such as free games.

“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,” said FTC chairwoman Edith Ramirez.

“You cannot charge consumers for purchases they did not authorise.”

The FTC alleged 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 that their children could make without further action by their parents.

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 US$0.99 to US$99.99 per in-app charge.

Millions of dollars in unauthorised charges

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 finalise any purchase at all.

It is understood that Apple received tens of thousands of complaints about unauthorised in-app purchases by children.

One consumer reported that her daughter had spent US$2,600 in the app Tap Pet Hotel, and other consumers reported unauthorised purchases by children totalling more than US$500 in the apps Dragon Story and Tiny Zoo Friends.

According to the FTC, consumers have reported millions of dollars in unauthorised charges to Apple.

The FTC said the rapidly growing mobile arena is has become a prime focus of its consumer-protection efforts.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years