Apple Agrees to Refund $32.5 Million in to Parents Whose Children Made Unauthorized Purchases

ftcApple has come to an agreement with the U.S. Federal Trade Commission to  hand over at least $32.5 million in refunds to parents, whose children made app purchases without their consent.

In a press release detailing the announcement, the FTC’s Chairwoman, Edith Ramirez said, “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. You cannot charge consumers for purchases they did not authorize.”

The agreement is a response to an FTC complaint that alleges that Apple violated the FTC Act by not notifying parents that password authorization actually lasted for an additional 15 minutes – not just for a one-time payment. These purchases ranged from $.99 to $99.99 for each in-app item, sometimes accumulating into charges in the thousands, resulting in Apple’s collection of millions of dollars in unauthorized purchases from minors:

Apple received at least tens of thousands of complaints about unauthorized in-app purchases by children. One consumer reported that her daughter had spent $2,600 in the app “Tap Pet Hotel,” and other consumers reported unauthorized purchases by children totaling more than $500 in the apps “Dragon Story” and “Tiny Zoo Friends.”

According to the settlement, customers must request refunds from the app store to get refunds, which must total $32.5 million within one year of the settlement. Any remainder will be paid towards the FTC:

Under the settlement, Apple will be required to provide full refunds, totaling a minimum of $32.5 million, to consumers who were billed for in-app charges that were incurred by children and were either accidental or not authorized by the consumer. Apple must make these refunds promptly, upon request from an account holder. Apple is required to give notice of the availability of refunds to all consumers charged for in-app charges with instructions on how to obtain a refund for unauthorized purchases by kids. Should Apple issue less than $32.5 million in refunds to consumers within the 12 months after the settlement becomes final, the company must remit the balance to the Commission.