United States - Apple Settles with FTC for $32.5 million over Kids’ In-App Purchases

Apple Inc. has agreed to provide full refunds to settle an FTC complaint that it billed consumers for charges incurred by children in kids’ mobile apps without their parents’ consent.  The refunds will total at least $32.5 million.  The settlement also requires Apple to change its billing practices.  The complaint alleged that these practices violated the FTC Act in two respects.  First, without telling parents, Apple allowed a fifteen-minute window of unlimited additional purchases once an account holder entered a password to authorize a specific purchase.  During this window, children could incur unlimited charges for game play or other in-app purchases with no further authorization.  The FTC complaint noted that Apple received tens of thousands of consumer complaints about millions of dollars in unauthorized in-app purchases by children.  One complaint reported $2600 in unauthorized purchases.  The FTC complaint also alleged that Apple often presented a screen with a prompt for a parent to enter a password in a kids’ app without explaining that password entry would finalize a purchase.

The Commissioners issued several public statements explaining their views.  The agreement will be subject to public comment through Feb. 14, 2014, after which the Commission will decide whether to make the proposed consent order final.