Apple to pay at least $32.5 million to refund kids' in-app purchases

iPod company agrees to provide full refunds to thousands of consumers to settle Federal Trade Commission complaint related to video game microtransactions.

Apple has agreed to pay at least $32.5 million in refunds to consumers to settle a Federal Trade Commission complaint brought against the company related to the way in which iOS devices make it simple for children to spend real-world money without parental consent.

The FTC announced the news today on its website.

The original FTC complaint claims that Apple violated the FTC Act by failing to inform parents that by entering their password on an iOS device, they were allowing for 15 minutes of additional unlimited purchases that their children could make without consent.

The FTC's announcement today specifically calls out iOS video games, which often charge for virtual items or in-game currency at a rate of 99 cents to $100, or more. The complaint includes tens of thousands of instances where children spent money without their parents' consent. In one example, one consumer's daughter spent $2,600 in Tap Pet Hotel.

In addition to the fee, Apple must change its billing practices to ensure that it has obtained "express, informed consent" from consumers before they are charged for in-app purchases. Apple must implement these changes no later than March 31, 2014.

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Eddie Makuch

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.
163 comments
Triton
Triton

Shame its not the parents fault that their kid has access to their password, oh wait no one has parent(s) these days. Must be someone else's fault.

Karjah
Karjah

How about changing things so kids can't spend over a certain amount per in app purchase as well.  Its insane some apps are charging over 100 bucks for a car or powerup.

oneligas
oneligas

pffft they make that on a slow Sunday afternoon

keyb0red
keyb0red

This just encourages the stupid parents. 

It takes 2 seconds to turn off in-app purchases.

tsunami2311
tsunami2311

Go apple!, Sarcasm I dont like apple

whatsazerg
whatsazerg

Apple did this not b/c they were like " OH SH*T, THIS IS GONNA COST US BIG TIME "....   it was simply a kind gesture to do the right thing....  and if you believe that, I have some land for sale.

Gelugon_baat
Gelugon_baat

Wow - I certainly did not see Apple's agreement to a settlement, and changes to its policies on top of that.

I thought it would be more defensive.

blaze_boy30
blaze_boy30

I believe both game publishers and parents share the blame in these predicaments rather than one or the other. Parent should be aware of the nature of these games before they buy it for their kids. Inform the kids about what these games are and set ground rules. One the other side, I personally don't think publishers should be creating microtransaction-based games for children in the first place. Some of them don't have the self-discipline to not give click the buy button in a game. Perhaps they thought they'd ask their parents for permission? Generally speaking, their target audience has less discipline than an adult. What should be is this: have the parents create some sort of family account and let them get notified when the child makes a transaction. The parents can choose to accept or decline the transactions. I mean it certainly would have save apple the trouble of giving out all those refunds.


P.S. - Some of you may argue kids should not have cell phones first place. I didn't have a cell phone until I was 18.  I'd say that's up to the parents. If you don't want to give them one, then don't. But if you do, you had better be ready to teach them how to use it properly.

SIDEFX1
SIDEFX1

Reality is $32.5m is like APPLE flinging 50 cents off to a bunch of poor kids and watching them fight over it.

strothers101
strothers101

I think this has more to do with the ignorance or lack of understanding on the part of parents. My parents wouldn't have a clue what microtransactions are so the idea that I could use their credit card to purchase in game items wouldn't cross their minds. In saying that, I am in my mid twenties. I guess parents of younger generations should probably learn the ins and outs of these products before entrusting them to their children.

nice2400
nice2400

every app should be password restricted.......

there you go problem solved

vannacut
vannacut

before blaming it on parents, one must make a baby first...

MrMilkmann
MrMilkmann

That's just part of the stupidity nowadays. Parents just through a screen in front of their kid's face and let it babysit for them. How about you watch your fucking kid instead of just handing them an ipad to take care of them.

Dunan
Dunan

Some of you have very naive viewpoint. More children than you know are brought up on these devices and actually know how to use them, better than some parents I might add and schools have begun to introduce them into the classroom at an early age.

This might even illustrate that many of you have no experience with children and phone/tablet devices.

Many people have stated the problems so I won't go over them again but being able to make an account without a credit card attached would be a nice step.

I've let kids on my ipad before but if I for whatever reason signed in to do something it'd still be open for the next 15 minutes. Some of the apps are so aggressive in their pushing for IAPs that it's borderline harassment.


So together it's a recipe for potential disaster though that's already been proven more or less.

mr_enlightened
mr_enlightened

2600$ is a lot of money in my country, and to see that little girls spend it that way in the USA, it brings a tear to my face.

sirkibble2
sirkibble2

It's astounding how hands-off parents are. I'm not saying we need helicopter parents hovering over everything their child does but when it comes to money, you better know what your child is purchasing or purchase it for them. 


I don't know what entertainment will look like 10 years and what sort of gadgets and whatever my kids will be into that I may know nothing, so I'm trying not to be quick to judge but jeez! It's crazy that parents won't get knowledge about what their kids are getting into. 

Toysoldier34
Toysoldier34

You have to enter your password and confirm a purchase before it is made. The parents should either restrict this or be sure their children are smart enough to not abuse this or be prepared to handle the consequence.


While it is very shady in many apps and the app store should be far more regulated than it is, this still falls back to the parenting and what they are allowing their children access to.

decoy1978
decoy1978

Why the hell are you giving children cell phones to begin with is beyond my comprehension. And then parents go crazy when their kids access a "restricted" sight or when they accidentally purchase online items. Parents need to take more responsibility on what they give their children and MONITOR them... aka be a damn parent. 

jinzo9988
jinzo9988

Perhaps children shouldn't have cell phones then.  Sorry but I don't know what possesses parents to give a child a cell phone like that, if they were to give them a cell phone at all.

pyro1245
pyro1245

i'm sick of seeing that damn bird everywhere.

haze0986
haze0986

my problem is sure apple paid 32 million but im guessing they earned twice that

DiverseGamer
DiverseGamer

Of course it involves micro transactions.

untouchables111
untouchables111

I'm glad to hear apple is paying this back. But I do blame both parents and devs. First who let's a Child... Play a game that could result in an mistaken purchase? Kids shouldn't be allowed to use devices of that caliber until they know what money even is. This is why they make Kid Specific handheld devices. My kids have these for this reason our society is moving more towards a normal of you get children having cellphones or smartphones and that to each their own but it's way to crazy. And devs have been moving more towards in app purchase crap for a while now and its ruining the quality of games that are made.

telaros
telaros

SWEET, sweet, ever so loving justice finally served. That took a long as time to resolve.

bluefox755
bluefox755

I understand that these things are intentionally deceptive and designed to get money this way, but it's kind of the job of parents to be informed about this stuff. That being said, I still agree with punishing the devs.

jeremy-
jeremy-

@Triton  You are thinking way too inside the box. Hypothetical... so, lets say you take out an insurance policy, turns out there is a stupid by-law on page 127 that said your policy doesnt cover you for power surge, so now when you have an incident like say a Led TV failure by a brownout by the powercompany you are not covered.


This is the same situation for some people with IT. THey have a complicated job in a non-IT industry and they dont play phone games, they arn't aware of the in's and out's until their kids already use their CC to rack up a single $100 app purchase.


I work in IT, so dont think I'm arguing this from lack of knowledge myself. I just think you dont even need to play devil's advocate to see how predatory app purchases are and how easily they can catch somebody who doesnt understand IT off guard.


So next time you are calling every non-nerd in the world a moron... just consider how much knowledge you have of Accounting, Trade Practices Law, the insurance industry and a bunch of other arbitrary knowledge areas and consider that it doesnt make you stupid to not be an expert in everything.


This being said, Australian and other country trade laws/practices say that when a company has 'specialty knowledge' of an area... like IT, Insurance, Accounting... they have an EXTRA duty of care to those consumers not to scam them because not everybody is going to understand it. EDIT*** a typo.

thebigo3d
thebigo3d

This comment is ridiculous. Not all parents are providing the passwords to their children. My sister strictly monitors the games her children are downloading by keeping the password a secret. By allowing a user to bill to an account for 15 mins after a password is entered she lost 19.99 when one of her kids made an in app purchase.

I think apple should change more then this 15 minute policy and allow users to sign up for an app store account without needing to provide either a gift card or a credit card. This way parents can still download free content without needing to worry about account charges.

de-astroturfer
de-astroturfer

@Triton  If you accidentally leave your door unlocked one day is it OK if we all come round "your" house and steal all "your" stuff, we're not thieves or anything, you left your door open that makes "your" stuff our stuff, in the meantime in the absence of any high walls or locked gate we might just hang around in your front garden waiting for you to slip up. Oh and don't forget to tell the judge it was all your fault !

thebigo3d
thebigo3d

Not all parents are tech savy and know that this possible or that in app purchases are even available.

michalmis
michalmis

@Gelugon_baatThey would have lost eventually, and thier lawyers woulda taken much more then that =) 32 milion is scraps for apple.

hystavito
hystavito

@strothers101 Maybe the way the system works though, is the problem.  I haven't had an iOS device for some time, but the "15 minutes" thing sounds unusual.  I would assume that if you simply turn off in-app purchases as an OS setting, that's it.  I guess what would be best is 3 settings, one allows them always, one allows them only with password, and one completely disables them.  Again, I don't know if maybe that is already the way it works.  I think even if you go with a password prompt setting, it should be per purchase instead of lasting 15 minutes.  Of course I understand the problems of balancing this with user convenience, that's why I think these mobile OS's really need multiple user setups, or modes, or something to make it easier for parents, especially considering how many young kids are getting tablets these days.  I have heard about some devices doing this, but I think the vast majority do not.


Ultimately if they want parents to buy these things, they need to make it easier to control how their kids can use them, or face backlashes like this.

SIDEFX1
SIDEFX1

Well if your born in september then you know your parents had a pumping new years..

skittzo_s
skittzo_s

@MrMilkmann My god, you honestly don't know shit about parenting or kids. If a child wants to play on the ipod and they have been good etc. Why the hell can't that play on it for a short time? Fuck IT... FROM now on children cannot play any electronics, watch movies, Fart, Cough or Shit, because someone somewhere is going to have a whinge. It's Obvious that you just wanted to sound good.

de-astroturfer
de-astroturfer

@MrMilkmann What and hold down a job make the dinner, clean the house and pay the bills all at the same time. thats easy for you to say ! 

Radnen
Radnen

@Dunan Finally someone with intelligence... I was beginning to think anyone with a brain left GameSpot altogether!

SIDEFX1
SIDEFX1

5 cents is a lot of money to someone who dont have it.

de-astroturfer
de-astroturfer

@Toysoldier34 Ive got an idea lets make all fraud legal and just blame the parents for everything ! or more specifically lets blame all victims for not knowing it was a con, lets make not knowing everything about everything 24/7 a crime and reward those who expose such reckless people, with complete access to their bank accounts. People with learning disabilities, children or the elderly should probably have their houses repossessed as they are clearly the worst offenders and the money stollen sorry gained should be given to worthy causes such as the super yacht fund for poor rich people.


But wait why stop there lets make all crime legal if someone abuses a child lets not blame the abuser lets execute the parents for not watching their kids 24 hours a day.    

skittzo_s
skittzo_s

@untouchables111 Could you elaborate as to what handheld devices they make for kids?

haze0986
haze0986

@untouchables111 you are aware that they make it tricky to create an apple id with no credit card, meaning even for a childs account it asks for one even for free apps. its very easy to have this happen to no fault of the parents at all, blaming parents for how apple has their system setup is your first problem

telaros
telaros

@bluefox755You don't understand. The parent has to input the password to purchase like a game for example, and you do that for every purchase.


What Apple did... was rather evil actually. It prayed on the parent's to be unaware of the fact, which is not stated in any of their policies or conveniences you can just choose to turn on and off, but instead made it an unmentioned default feature.


Note, that in order to even use the store you MUST have a payment account to credit card or bank card attached to it at all times.


Input password, install purchased game, logout store,kid plays game, kid clicks on purchasable items because they can't wait hours or days to continue playing for another 10 minutes. Parent comes back to check on kid and their bank has been charged with money they 'legally' can't get back.


It's how Apple has managed to make a huge sum of money on parents that are unaware. There was no way to be aware unless you purchase a lot of stuff within a 15 minute time frame and notice your password isn't being required to make those purchases.

grin89
grin89

@de-astroturfer move over here to america if someone you dont know walks into your house and starts taking stuff your legally sound to shoot them dead.

Gelugon_baat
Gelugon_baat

@michalmis 

Well, so much for the conspiracy theory that rich corporations can buy off judges and juries if they would lose eventually. ;P

With that said, the money is indeed small - if it can continue business as usual. That can't be so, if Apple has to implement policies with wording that would work against it in the future.