Apple agrees to pay $32.5M to customers in FTC settlement over in-app purchases
Apple is to refund “at least” $32.5 million to customers who complained their children made in-app purchases without permission, the US Federal Trade Commission has announced .
Apple CEO Tim Cook revealed the settlement decision to his staff in a memo. That memo has now leaked online, giving an inside look at what the executive really thinks about the situation. He said Apple had already refunded in-app purchases to parents last year (approximately 37,00 claims refunded), and that a federal judge had ruled Apple's actions a full settlement.
"Then the FTC got involved and we faced the prospect of a second lawsuit over the very same issue," Cook said. “It doesn’t feel right for the FTC to sue over a case that had already been settled. 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."
The FTC opened an inquiry simply because it didn't approve of the lack of clarity surrounding in-app purchases. Customers were not explicitly told how in-app purchases and passwords worked together. Parents could enter their password, for instance, and then their child would have a 15-minute window to pick up that device and make in-app purchases without having to re-enter a password. This resulted in many parents receiving huge bills.
The FTC said in a statement that the lack of clarity over in-app purchases violated the FTC Act. The regulatory body even quoted an example where one child spent $2,600 without permission in the app Tap Pet Hotel. Consumers have reported millions of dollars in unauthorised charges to Apple.
Apple not only has to pay again but will now also have to make its billing practices more clear. In addition, Apple will have to give any unclaimed balance of the $32.5 million to the FTC after a year.