Apple reaches settlement with FTC over in-app charges

Apple today settled a complaint by the Federal Trade Commission that claims the company did not have proper safeguards in place to prevent in-app purchases by children. As part of the settlement, Apple agreed to refund $32.5 million for all unauthorized charges. The Cupertino company must also change its billing policy in a way that requires permission for all attempted charges. The complaint stems from in-app purchases that were made by children without their parent’s consent. In earlier versions of iOS, it was possible to make purchases during a 15-minute window after a password was entered into an iTunes account. Inevitably, it would happen like this — a parent would enter their password to install a new app and then hand the iPad to their child. During the next 15-minutes, iOS would remember the password and authorize any in-app purchases. Children, all excited with their new game, would start buying coins and other in-app items. Most of the time, the tots had no idea that they were making purchases with real money. These in-app charges, sometimes totaling thousands of dollars, would show up later on an iTunes receipt or a credit card register. As part of the settlement, Apple must email all potentially affected users and tell them how to obtain a refund. Apple must put aside $32.5 million to cover these refunds. If customers request less than that amount, the remainder will be turned over to the FTC. Apple earlier settled a class-action lawsuit over these in-app charges, but the terms of agreement in the civil case did not require any changes in Apple’s billing practices. This settlement will be open for public comment until February 14th. After that date, the FTC will decide whether to enter a final order on the settlement. [Via WSJ] Continue reading →

from iPhone Hacks | #1 iPhone, iPad, iOS Blog » iPhone 4 Camera Beats HTC EVO 4G, Samsung Galaxy, Droid X In Showdown