Apple's Free Kids Apps Costing Parents Hundreds?

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SAN JOSE, CA -- Apple lets children download a free app to play games on iPhones, at which the kids rack up hundreds of dollars in charges for "game currency" without their parents' knowledge, parents say in a federal class action: "These games are highly addictive, designed deliberately so, and tend to compel children playing them to purchase large quantities of Game Currency, amounting to as much as $100 per purchase or more."

The parents say Apple requires a password to download applications and buy game currency through its devices and retail outlets. But once the password is entered, a user has 15 minutes to buy stuff before being prompted again.

"This practice enabled minors to buy Game Currency, in one click sums of $99.99 or more, without entering a password, causing Apple to pocket millions of dollars from such Game Currency transactions with minors and without the authorization of their parents, whose credit cards or PayPal accounts are automatically charged for the purchases," according to the complaint.

Apple's practice of selling game currency to children via so-called "free" apps, and "making millions of dollars of ill-gotten gains," recently caught the attention of the Federal Trade Commission, the class claims. 

"Such attention caused Apple in early 2011 to begin requiring the entry of a password for all individual transactions, and to warn users that 'free' games may contain in-app content for sale. Nevertheless, Apple continues to sell Game Currency to minors," the parents say.

They add that while many games are offered as "free," they are "developed strategically to induce purchases of Game Currency." 

For instance, while the game "Smurfs' Village" is offered as a free download, the purpose of the game is to create a "virtual village," and "the construction process is greatly sped up by the purchase of 'Smurfberries,' Game Currency that costs real money." 

At a "Smurfberry Shop," 50 Smurfberries cost $4.99, while 1,000"Smurfberries can be purchased for $59, the class says. 

One "young gamer" spent $1,400 on Smurfs currency, according to a "news story," the class claims. 

"The Smurfs game has gained so much attention because it exploded to the No. 1 spot of top-earning i-Phone games," the complaint states, citing a URL from the website.

Citing that story, the complaint states: "There's even a button to purchase $100 in Smurfberries, which most rational, hard-working people would probably never click, but appears mouthwatering to players who think they're just innocently playing the game."

Lead plaintiff Garn Meguerian says he allowed his 9-year old daughter download free games from iTunes, including "Zombie Café," "Treasury Story" and "City Story," for which she bought $200 in game currency without his knowledge.

Apple has not offered refund to parents whose children bought game currency without parents' knowledge or permission, the class claims. 

Meguerian demands damages for breach of contract, violation of the California Consumers Legal Remedies Act and unjust enrichment.

Lead counsel is Jonathan Schub with Seeger Weiss of Philadelphia.