Apple caves and agrees to refund $36.5 million for app purchases made by kids

Apple has agreed to refund at least $US32.5 million ($A36.5 million) to consumers to settle a US Federal Trade Commission complaint that it billed for mobile app purchases made by kids without their parents’ consent.

Under the terms of the settlement, the tech giant must also change its billing practices to ensure it has obtained “express, informed consent” from consumers for app purchases.

“Consumers should not have to sacrifice basic consumer protections to enjoy the benefits of mobile technology,” FTC chairwoman Edith Ramirez said at a press conference in Washington today.

Consumers in the US will get full refunds to cover purchases from March 2011.

The settlement in the US follows the Australian Competition and Consumer Commission’s announcement last year that it was investigating apps that aggressively promote in-app purchases to children.

A spokesperson for the ACCC told SmartCompany this morning the issue of in-app purchases, particularly in games used by children, continues to be an area of concern.

“The ACCC is concerned about the potential for misleading and deceptive conduct in the promotion of apps as well as inadequate disclosure of key terms and conditions associated with using the apps,” the spokesperson says.

An ACCC sweep of a selection of apps identified that fewer than 25% of children’s ‘free’ game apps on one platform disclosed that in-app purchases could be made.

The sweep also found less than 20% of children’s ‘free’ game apps across both platforms included information about how to restrict devices to prevent inadvertent in-app purchases.

The ACC spokesperson says the regulator has “engaged with the industry” about concerns that many ‘free’ games that appeal to children do not come with adequate disclosures about costs associated with app-based games.

“The ACCC welcomes the actions of the US FTC as it strengthens the growing global consensus on the need to address concerns about in-app purchases,” the spokesperson says. 

Jamie Nettleton, partner at Addisons Lawyers, told SmartCompany the FTC’s focus was on the platform itself rather than the individual apps.

“Clearly it is a high profile step which is more likely to cause people to sit up and take notice,” he says.

“Certainly the ACCC has been looking at this issue and monitoring it for some time and it is consistent with other efforts it has made where there are suggestions something is free when in fact it is not so.”

Nettleton says in Australia the ACCC will primarily be concerned with making sure there is no misleading or deceptive conduct when payment is meant to be made for goods and services, but he says a global solution is required.

“We are talking about a global phenomenon not just a local phenomenon, so it is necessary for steps to be taken at a global level,” he says. 

In 2011 Apple introduced the option to require a password for all in-app purchases, but this option is not enabled by default.

 Android devices also have this option, sometimes enabled by default.