Apple reaches $32M settlement over kids’ apps

Apple will pay at least $32.5 million in refunds to families whose children spent money on mobile applications without their parents’ consent.

The settlement with the Federal Trade Commission announced on Wednesday will also require the company to change its billing habits by March 31 to make sure that adult customers approve purchases before charges go through.

“This settlement is a victory for consumers harmed by Apple’s unfair billing, and a signal to the business community: whether you’re doing business in the mobile arena or the mall down the street, fundamental consumer protections apply,” FTC Chairwoman Edith Ramirez said in a statement.

“You cannot charge consumers for purchases they did not authorize.”

{mosads}Apple’s App Store offers many games, puzzles and other apps for children, some of which offer to sell virtual items or other benefits while interacting with the app. The in-app charges can range from 99 cents to $99.99 each.

According to the FTC, parents were sometimes told to enter their password while children were in the midst of using an app. However, parents did now know that by entering their passwords, they were approving a purchase or allowing their children to make unlimited purchases in the next 15 minutes without additional action, the commission claimed.

Apple allegedly received at least tens of thousands of complaints about the purchases from parents who did not realize what charges they were singing up for. One parent allegedly unknowingly spent $2,600 while her daughter played the game Tap Pet Hotel.

The tech company has agreed to notify all consumers charged for in-app purchases that it has refunds available if children spent money without their parents’ approval.

The ultimate amount of refunds could swell, if more customers than expected take the California-based company up on its offer. If Apple issues less than $32.5 million in refunds, the remainder will go to the FTC.

The FTC voted 3-1 to accept the proposed settlement. The lone dissenting commissioner, Republican Joshua Wright, said in a statement that the case involved “a miniscule percentage of consumers” and deserved fuller study.

Subjecting Apple to the FTC’s expansive order, despite the “rapidly changing” technological landscape, “is very likely to do more harm to consumers than it is to protect them,” he added.