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Network World - Apple today agreed to pay $32.5 million to settle complaints the Federal Trade Commission said the company billed consumers for millions of dollars of charges incurred by children in kids' mobile apps without their parents' consent.
“As alleged in the Commission’s complaint, Apple violated this basic principle by failing to inform parents that, by entering
a password, they were permitting a charge for virtual goods or currency to be used by their child in playing a children’s
app and at the same time triggering a 15-minute window during which their child could make unlimited additional purchases
without further parental action. As a consequence, at least tens of thousands of parents have incurred millions of dollars
in unauthorized charges that
they could not readily have avoided. Apple, however, could have prevented these unwanted purchases by including a few words on an existing prompt, without disrupting the in-app user experience,” the FTC stated.
The settlement will also make Apple change its billing practices to ensure that it has obtained express, informed consent from consumers before charging them for items sold in mobile apps.
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The FTC’s complaint alleges that 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 their children could make without further action by the parent.
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 99 cents to $99.99 per in-app charge,
the FTC stated.
The complaint alleges that Apple does not inform account holders that entering their password will open a 15-minute window in which children can incur unlimited charges with no further action from the account holder. In addition, according to the complaint, Apple has often presented a screen with a prompt for a parent to enter his password in a kids’ app without explaining to the account holder that password entry would finalize any purchase at all.
In its complaint, the FTC notes that Apple received at least tens of thousands of complaints about unauthorized in-app purchases by children. One consumer reported that her daughter had spent $2,600 in the app “Tap Pet Hotel,” and other consumers reported unauthorized purchases by children totaling more than $500 in the apps “Dragon Story” and “Tiny Zoo Friends.” According to the complaint, consumers have reported millions of dollars in unauthorized charges to Apple.
Under the settlement, Apple will be required to provide full refunds, totaling a minimum of $32.5 million, to consumers who were billed for in-app charges that were incurred by children and were either accidental or not authorized by the consumer. Apple must make these refunds promptly, upon request from an account holder. Apple is required to give notice of the availability of refunds to all consumers charged for in-app charges with instructions on how to obtain a refund for unauthorized purchases by kids. Should Apple issue less than $32.5 million in refunds to consumers within the 12 months after the settlement becomes final, the company must remit the balance to the Commission.