FTC: Apple Must Refund $32.5 Million to Consumers of Children's App Purchases

January 16, 2014 - GamePolitics Staff

The Federal Trade Commission ruled this week that Apple must refund at least $32.5 million to parents whose children made in-app purchases on iOS devices without their consent. In its ruling, the agency said that Apple did not do enough to ensure purchases made by children were knowingly authorized by their parents. The FTC also highlighted a practice it did not like: allowing users to enter their passwords once for a single purchase then continue to make purchases throughout a 15-minute window.

The FTC said "tens of thousands of parents" had complained to Apple about unauthorized in-app purchases made by their children, including one consumer who claimed that their daughter spent $2,600 in Tap Pet Hotel.

Apple must contact affected users and refund at least $32.5 million in purchases within the next 12 months or surrender the remaining balance to the FTC. The settlement also means Apple has to change some of its policies on app purchases and in-app purchases.

Source: CVG

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Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

It can sometimes be hard to understand how this happens. Don't give your kids your password just like you don't give them your credit card. no sympathy for parents who make THAT idiotic mistake. Give your small child a blank check and its your own fault when they go wild with it.

Granted it could be a case where a lot of these incident occurs is when a parent downloads the app and lets the kid start playing right away; that would give the kid 15 minutes to bring up charges. In this case it comes to parental ignorance for not knowing about the 15 minute window and/or not knowing how to turn it off. One thing that Apple could do that WOULD help is if the 15 minute password window and IAP were turned off by default, to give even less of a chance for ignorant parents to fall into this. 15 minute window is there for a reason, as it would be very inconvenient to have to retype your password every single time. Though they also need to make the option a little easier to find... had to look it up to find these options were listed in the restrictions section

Though another thing apple could is make it so there is a separate password time window for app store purchaes and IAP. Just for the above mentioned case where a parent downloads a game for their kid and then lets the kid start playing right away. If there are separate windows then if the Kid tries to make an IAP they will get blocked. Thus the parent can keep the window on and would not have to worry about their kid buying IAP's since they'll need the password again

However, that being said i do hope minor changes like that can stop these kind of instances from occurring. Really, one reason why the Freemium game market has become so poisonous is because of incidents like this where little kids make a lot of purchases without even realizing how much money they are spending... really one thing we know is that there are a bunch of companies that are, in total, $32.5 million richer than they should be. Companies can make millions just off the mistakes of children, and that gives them all the more reason to maketheir IAP grossly overpriced and create powerful incentives to purchase. Though maybe these parents should be suing the companies who make these games rather than apple... There would be A LOT less incentive for such poisonous business practices if it was the companies, not apple, getting sued.

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

Why should the app developers be sued? They did nothing wrong. The only thing they did was put some items up on Apple's shelf. Apple is the one handling all the transactions. They are the ones responsible for making sure the transactions are valid. 

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

I don't see how the app developers are any less responsible than apple. They put the items up for sale where they KNOW children have easy access to them; they have $32.5 million in IAP sales that PROVE how easy it is for kids to accidently spend money on their products. They don't place any kind of restrictions that would prevent mistaken purchases; a lot of these games don't even have functions to prevent you from spending their premium currency(gold/gems/whatever that you need actual money to get more of) by accident(god knows how many times someone accidently clicked the "speed up" button and would have loved to have a "are you sure?" prompt). Apple is the only one that makes any attempt to stop such purchases and waste.

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

Would you hold a candy maker responsible if a child stole their parent's credit card and bought $1000 worth of candy?

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

Apples and oranges. We are talking about the in-game store that the game developer set up as part of THEIR game; in this case, the publisher/developer has a direct role in running the shop. And the developer made their in-game shop very easy to access for children and constantly encourages them to spend money without parental consent, and they do nothing to prevent abuse.

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

No. Apple runs the store. Apple fulfills the transaction. Apple takes the payment. The app developer just hands the goods to the customer. The app developer has ZERO control over how easy or not it is to actually buy anything. 

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

The app developer has plenty of control; after they built the app that the in-game store is on. They are the ones that put that store together. For instance, they can include a "are you sure?" promtp to prevent accidental purchases and spending premium cash(they of course do not since wasteful spending is encouraged). They could also require players to "login" to access their in-game store. They could create privacy settings within the game itself that could lock children out of IAPs. They built the in-game shop that you buy your IAPs from in those particular games, and can run it how they wish. Why does the developer share no responsibility when they built the store that gives children easy access to all their products?

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

And all of those safeguards are pointless if Apple leaves the doors to the register wide open. Apple is ultimately responsible for what transactions it processes. It is Apple that is processing the credit cards. It is the Apple iTune account that makes the purchase. 

That is where a claim against a bad transaction system lies. Are there complaints about IAPs? Yes. But none of those complaints have any merit if Apple locks down the actual purchasing of the items. 

To further illustrate this point:

A kid walks into a store and sees a bunch of yummy candy on the shelf. He would love to have some. So he grabs an armful of candy and walks up to the register. The clerk asks for him to pay for it. He pulls out his parent's credit card and gives it to the clerk. He eats all the candy before his parents realize he just bought $500 worth of candy on their card. 

Who is responsible for the charge here? If you answered the candy company, you are wrong. Blame lies here: One, the parents for not securing their credit card. Two the kid for taking it. Three, the clerk for not questioning the purchase. At no point is the candy company liable for the charge. In this case, the candy company is the app developer. They made an enticing product, but they never once saw money cross their hands in any transaction processed. 

Re: FTC: Apple Must Refund $32.5 Million to Consumers of ...

No those safeguards are not pointless since all of them would help prevent and restrict children from spending their parents money. The app developers DO have the power. They just don't want to because they want to make spending money in their game so easy that a child could do it; literally.

And again, the candy analogy does not work because that is NOT how IAP are structured. Its more like heresy's having their own section of the store that they set all the prices for and have their their own non-apple-clerk that hands out the candy(in-game store). The kid still has to had his credit card to apple for final purchase, but he can't make that purchase unless the Hershey clerk hands him the candy first. And the clerk doesn't have too, he could wait until the kid brings his parents with him to give him his candy so he can take it too apple (putting in those above mentioned restrictions). Heck instead of restricting the kid, he often doesn't even pay attention to who's taking his candy; and he encourages them to take as much as he wants even though he knows full well that many of those taking his candy are kids that do NOT have their parents permission to be taking candy. He builds a system that makes the kid want more, and more candy; much more candy than he could ever afford.

When it comes down to it, the developer/publisher DOES take an active role in these purchases. These purchases can NOT be done without the in-store structure that THEY built into the game and have control over. They can restrict but they choose not too because that gets them more money... millions in accidental purchases.

Not to mention that apple only makes like 10% off all those transactions; The other 90% goes to the publisher. But somehow Apple is the one who must provide 100% of the refund and be the only one suffering financial loss for the publisher's terrible business practices.

 
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