Apple agrees to $32.5 million settlement with FTC over in-app purchases

The practice of offering premium content purchases inside an iOS app has cost Apple quite a bit of money thanks to its poor implementation. Today, the FTC announced that Apple will offer at least $32.5 million back to iOS users for in-app purchases bought by kids without parental consent.

The FTC's press release stated that the settlement also has Apple agreeing to change its billing practices for in-app purchases "to ensure that it has obtained express, informed consent from consumers." Apple has been hit with lawsuits in the past by parents who have claimed that the company made it easy for kids who use iOS devices to think they are paying for something in a game with fake currency rather than with real money.

9to5Mac has posted an internal email from Apple CEO Tim Cook that was sent to company employees today. In the note, Cook said that in 2013, Apple sent out emails and even postcards to 28 million App Store customers offering refunds for any in-app purchases that might have been made without the consent of a parent; Cook said that the company received 37,000 refund claims.

While Cook said Apple felt the FTC's actions were a case of the regulator going after Apple after the refund case was settled, he added, "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."

Source: FTC and 9to5Mac | Image via Apple

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Pluto is a Planet said,
According to the article, kids aren't even aware they're spending money, that's the problem.

Wouldn't be a problem if you put purchasing behind a password and don't give the password to your kids.

spenser.d said,

Wouldn't be a problem if you put purchasing behind a password and don't give the password to your kids.

seriously, just put a PIN on the store so it stops it. apple shouldn't have to pay

LOL...you don't necessarily require authorization to buy within an app. My 2 year old daughter did quite a bit of in game shopping last week..bits of bird food..some bones for the dog..this and that...i was surprised by her intelligence but she is not adult enough to learn credit/debit card or password (I guess) so these were shocking unwanted purchase...Apple did refund straight after notifying..

sOftGuRu said,
LOL...you don't necessarily require authorization to buy within an app. My 2 year old daughter did quite a bit of in game shopping last week..bits of bird food..some bones for the dog..this and that...i was surprised by her intelligence but she is not adult enough to learn credit/debit card or password (I guess) so these were shocking unwanted purchase...Apple did refund straight after notifying..

ok, that i understand, but then it should fall on the app programmer, not really apple, shouldn't it? or does apple pay the refund then go after the app people? hmmm

All those defending Apple, do you think they're stupid? Why do you suppose they started refunding even before the FTC demanded it, if they weren't to blame at all and were confident they could have refused and won the case?

Romero said,
All those defending Apple, do you think they're stupid? Why do you suppose they started refunding even before the FTC demanded it, if they weren't to blame at all and were confident they could have refused and won the case?

No they aren't stupid. They know we live in a country where we let parents not take responsibility for their actions with their kids. Just because they can't win the case doesn't mean they should be to blame.

I agree. If the parents who gave their kids unsupervised access to their account with their credit card info lost that money they'd learn their lesson and make sure it didn't happen again.

This sort of crap just encourages lax behaviour.

accept it rather than take on a long and distracting legal fight.

Shepcook: Everybody stand down. Let's not have a fight about this.
Lawyer Wrex: Why not?

Today, the FTC announced that Apple will offer at least $32.5 million back to iOS users for in-app purchases bought by kids without parental consent.

Cool that the users are going to get the money.

Your thorough and in-depth explanation of your position has convinced me that I have always been wrong and a failure at life. I have completely changed my ways, and shall eternally owe you everything I for showing me the error in my ways.

WhatTheSchmidt said,
Your thorough and in-depth explanation of your position has convinced me that I have always been wrong and a failure at life. I have completely changed my ways, and shall eternally owe you everything I for showing me the error in my ways.

I am glad I was able to have that much influence over you with 3 words.

techbeck said,
Hard to tell considering Apple has been refunding a lot of people.

The article he quoted talks about internet connectivity and "online orders". This one talks about refunds on "Apple apps". If you guys can somehow find a connection, I'd be amazed. It's why I said "not even close"

stevan said,

The article he quoted talks about internet connectivity and "online orders". This one talks about refunds on "Apple apps". If you guys can somehow find a connection, I'd be amazed. It's why I said "not even close"

The article also said that iOS users spend more on apps. But I doubt this article has any correlation with the other since the other article doesn't specify in app purchases and the internet traffic was related to the holidays. This issue with Apple has been going on for a while.

stevan said,

The article he quoted talks about internet connectivity and "online orders". This one talks about refunds on "Apple apps". If you guys can somehow find a connection, I'd be amazed. It's why I said "not even close"

The last paragraph of the article I linked to has a link to how MLB makes much more from iOS users than Android devices even though Android has many more users. The MLB app is just a shell, you need to do an in app purchase to listen or watch games. This article is about in app purchases that, in the eyes of the FTC and apparently Apple agreed since they settled, are inappropriate.

WhatTheSchmidt said,

The last paragraph of the article I linked to has a link to how MLB makes much more from iOS users than Android devices even though Android has many more users. The MLB app is just a shell, you need to do an in app purchase to listen or watch games. This article is about in app purchases that, in the eyes of the FTC and apparently Apple agreed since they settled, are inappropriate.

And it all comes from kids making unauthorized purchases?

WhatTheSchmidt said,
Your thorough and in-depth explanation of your position has convinced me that I have always been wrong and a failure at life. I have completely changed my ways, and shall eternally owe you everything I for showing me the error in my ways.

At least we got that cleared up.

I hate IAP!

Just disable them in the "Settings" App -> "Restrictions" -> "Enable Restrictions", and enter a pass-code, then disable "In-App Purchases".

How about a tablet that has the ability for multiple users to login to their own content and Family Safety settings that can be applied to children accounts?

Not only would App purchases be protected/restricted, but kids wouldn't be accidentally posting on their parent's Facebook wall, accidentally messages, deleting email or seeing mommy's sexy pictures too.

I know, simply brilliant... Minds everywhere are exploding.

Maybe it could be something like Windows offers but on a tablet.

....... takes out its wallet, goes into the change (small coins section for those not knowing the term) section of the wallet and throws it at the FTC!!! lol

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