iPhone app refund could bankrupt developers

As the iPhone AppStore gets more popular, Apple has made significant changes the way refunds and policies are handled. As the new contract is rolled out, many developers are left scratching their head that their next big application could bankrupt them.

Apple takes 30% commission off every sale, leaving the developer with 70% of the sale going directly to the developer. The new refund policy allows users to request a refund for an application, up to 90 days of purchase, where the developer must refund 100% of the credit to Apple, not the 70% they were given.

The policy change could potentially bankrupt developers if users started requesting refunds after the payment has been made. Apple would still hold onto its 30% of commission, leaving the refund in the developers hands to deal with.

In the clause in the actual contract, Apple states its hold on the refund policy:
In the event that Apple receives any notice or claim from any end-user that: (i) the end-user wishes to cancel its license to any of the Licensed Applications within ninety (90) days of the date of download of that Licensed Application by that end-user; or (ii) a Licensed Application fails to conform to Your specifications or Your product warranty or the requirements of any applicable law, Apple may refund to the end-user the full amount of the price paid by the end-user for that Licensed Application. In the event that Apple refunds any such price to an end-user, You shall reimburse, or grant Apple a credit for, an amount equal to the price for that Licensed Application. Apple will have the right to retain its commission on the sale of that Licensed Application, notwithstanding the refund of the price to the end.

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