Ethical Performance
inside intelligence for responsible business


Apple to refund $32.5m to beleaguered parents

February 2014

Apple, the world’s most valuable information technology company, is to refund $32.5m (£19.9m, €23.9m) to parents whose children were able to buy from its App Store without permission because of inadequate safeguards.

Complaints were made to the US Federal Trade Commission (FTC) because customers were not told that unauthorised purchases could be made from the App Store for 15 minutes after they entered a password.

The FTC recorded “tens of thousands of complaints”. One parent reported that her daughter had spent $2,600 without permission.

The final payout could be higher than $32.5m. Even if the refunds fall short of that figure the difference will be paid to the FTC.

Apple has until March 31 to update its billing system to ensure that customers give informed consent before they can be charged for purchases.

Edith Ramirez, the FTC chairwoman, insisted: “Customers should not have to sacrifice basic consumer protections to enjoy the benefits of mobile technology.”

Apple chief executive Tim Cook, however, said the FTC’s involvement would surprise many.

He said: “Last year we set out to refund any in-app purchase made without a parent’s permission. We wanted to reach every customer who might have been affected, so we sent emails to 28 million App Store customers – anyone who had made an in-app purchase in a game designed for kids.

“When some e-mails bounced, we mailed the parents postcards. In all, we received 37,000 claims and we will be reimbursing each one as promised.

“A federal judge agreed with our actions as a full settlement and we felt we had made things right for everyone. Then the FTC got involved and we faced the prospect of a second lawsuit over the very same issue. To us it smacked of double jeopardy.

“However, the consent decree the FTC proposed does not require us to do anything we weren’t already going to do.”

The present payments apply only to US customers. Apple has already paid refunds to parents in other countries whose children incurred large bills.

Apple | North America | corporate reputation

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