Apple to Refund App Store Purchases Made Without Parental Consent
Apple to Refund App Store Purchases Made Without Parental
Consent
By EDWARD WYATT and BRIAN X. CHEN JAN. 15, 2014
An agreement between federal regulators and Apple may
make parents wince a little less at the sight of their children staring at an
iPhone.
The Federal Trade Commission said on Wednesday that Apple
had agreed to better ensure parental approval of purchases from the company’s
App Store. In addition, Apple will pay at least $32.5 million in refunds to
customers whose children made purchases without adequate parental consent.
Apple settled a class-action lawsuit last year over
unauthorized purchases within apps — transactions that could be made within 15
minutes of buying an app from Apple without having to provide an additional
password or authorization. As part of the settlement, Apple offered refunds to
consumers who were affected. The company said in an email to employees on
Wednesday that it had received 37,000 claims.
But the F.T.C. said that similar activity had continued
long after the class-action settlement. In a consent decree that now must be
approved by a federal court, Apple agreed to modify its practices.
“We allege that Apple has been aware of the issue since
at least March of 2011,” said Edith Ramirez, the F.T.C. chairwoman. “In our
view the problem continues and it needs to be rectified.” Apple faces a March
31 deadline to notify consumers about the refunds and to make other changes.
At one time, after a user bought an app, there was a
15-minute window to download other products without having to enter a password.
This meant that children with Apple devices had 15 minutes after their parents
bought an app to buy goods in the App Store or within apps.
With a software update to its mobile devices in 2011,
Apple began requiring users to re-enter passwords when trying to make a
purchase within an app, even if the app was opened within 15 minutes of buying
an app on iTunes. Once the password is re-entered, though, users have another
15 minutes to buy in-app items before they’re forced to enter their password
again. There are also controls in iOS, Apple’s mobile operating system, that
give parents more finely tuned controls over in-app purchases and the ability
to shut them off.
The F.T.C. said on Wednesday that Apple needed to be
clearer to consumers when other purchases can be made within 15 minutes. The
F.T.C. also said Apple must give consumers a choice when they buy an app about
whether to accept the 15-minute window for in-app purchases, as well as the
ability to withdraw their approval.
In an email to Apple employees on Wednesday, Timothy D.
Cook, the Apple chief executive, said that he did not see a reason for the
government to go after Apple since it had already agreed to settle the issue
with consumers.
Mr. Cook said the agreement with the F.T.C. did “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.”
Apple’s App Store for iPhones and iPads became successful
largely because it made the process of buying software as simple as the tap of
a button. Customers spent $10 billion last year in the App Store.
In April 2011, a group of parents filed a class-action
lawsuit against Apple concerning what they called “bait apps” — apps that were
free to download but included their own ministores to buy goods. Apple and the
plaintiffs in the lawsuit agreed to a settlement last year.
The business strategy for so-called bait apps is called
freemium, as in free meets premium. In mobile app stores, freemium apps now
generate more revenue than apps that charge up front, according to Flurry, an
app analytics company.
Steve Dowling, an Apple spokesman, said the company
intended to comply with the F.T.C.
“Protecting children has been a top priority for the App
Store from the very beginning, and Apple is proud to have set the gold standard
for online stores by making the App Store a safe place for customers of all
ages,” Mr. Dowling said. “Today’s agreement with the F.T.C. extends our
existing refund program for in-app purchases which may have been made without a
parent’s permission.”
According to the F.T.C., one consumer said her daughter
had spent $2,600 in the app “Tap Pet Hotel,” and other consumers reported
unauthorized purchases by children of more than $500 in the apps “Dragon Story”
and “Tiny Zoo Friends.”
The consent decree signed with the F.T.C. requires Apple
to pay at least $32.5 million; if the refunds total less, the remainder goes to
the F.T.C. There is no upper limit on the amount of refunds for which Apple is
liable.
Ms. Ramirez said the F.T.C. believed its settlement was
“more robust” and more thorough than the lawsuit settlement, in that it
requires Apple to modify its conduct.
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