Apple to refund $32.5 million after kids rack up app charges without adult consent

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Apple has agreed to refund $32.5 million to consumers, after games in its App Store allowed kids to make costly purchases without parental consent.

The refund was agreed upon under a Federal Trade Commission (FTC) settlement announced Wednesday.

According to an FTC complaint (PDF), the apps in question were purchased from Apple's App Store as far back as at least March 2011.

Purchases, which ranged from 99 cents to $99.99 per in-app charge, were apparently racked up during a 15-minute window in apps where purchases didn't require parents to re-enter their iTunes password.

“In many instances, Apple 'caches' ... the iTunes password for fifteen minutes after it is entered,” the complaint alleged. “During this process, Apple in many instances does not inform account holders that password entry will approve a charge or initiate a fifteen-minute window during which children using the app can incur charges without further action by the account holder.”

Through the alleged unfair billing practices, kids were able to, for at least a period, play to their hearts' content without the watchful eye of a guardian to rein in the spending.

According to the FTC complaint, one unhappy parent learned that her daughter incurred $2,600 in charges while playing an app game, called “Tap Pet Hotel.”

Despite doling out refunds last year under the terms of a class-action settlement with consumers rattled by its billing practices (37,000 claims were received by the company for refunds), the tech company must now cough up more funds to other account holders requesting refunds.

Apple must also modify its billing practices to “ensure that Apple obtains consumers' express informed consent prior to billing them for in-app charges, and that if the company gets consumers' consent for further chargers, consumers must have the option to withdraw their consent at any time,” a Wednesday FTC release said.

On Thursday, Richard Martinez, a partner at Minneapolis, Minn.-based law firm Robins, Kaplan, Miller & Ciresi, who chairs the firm's cyber security and data privacy practice, told SCMagazine.com that there was “enough blame to go around” for the criticized billing methods.  

“While Apple is in the crosshairs here, the apps themselves were generated by third parties,” Martinez said. “There's more than enough blame to go around in terms of the practices. In some of these apps, you can have in-app purchases, which you make through the app and not necessarily the App Store,” he said, later referencing the steep purchases for minutes of game time in children's apps.

“Little Timmy or Suzie might click away and spend $100 to enjoy 15 minutes on a game,” Martinez said. “There's always the common sense rule that it might not strike a lot of regulators as fair. But here, Apple has gotten itself burned, with the way they've built and exploited the iTunes store,” he said.

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