Apple Settlement for In-App Purchases Lawsuit Could Reach $100 Million

| by Sarah Fruchtnicht

Apple Inc. could end up paying $100 million to settle a lawsuit filed by customers who claim their children inadvertently spent large sums of cash on in-app purchases from their online store. Plaintiffs say that their children made in-app purchases on Apple devices without the knowledge or permission of the account holder. 

The lawsuit, filed by 5 parents in 2011, states that “Apple failed to adequately disclose that third-party Game Apps, largely available for free and rated as containing content suitable for children, contained the ability to make In-App Purchases.” The company agreed to give $5 store credit to as many as 23 million affected customers. Those who were charged $30 or more can claim a cash refund rather than store credit.

In-app purchases allow users to buy related content for an app they already have, i.e. virtual goods or new features for a game. They are lucrative options for game developers because the buyer does not pay a lump sum upfront, but rather spreads out money spent over time. Older versions of iOS let a user make in-app purchases without having to enter in the Apple ID password of the account holder.

In February 2011, the U.S. Federal Trade Commission said it would launch an inquiry into Apple’s in-app purchasing because of concerns that children were using these games. One particular game called Smurfs’ Village had an enticing purchase for 6 wagon of Smurfberries, which in fact cost $99 USD. The FTC published a report in December 2012 and based on their research it, “strongly urges all entities in the mobile app industry – including app stores, app developers, and third parties providing services within the apps – to accelerate efforts to ensure that parents have the key information they need to make decisions about the apps they download for their children.”

In 2010, Kevin Tofel wrote about how his stepdaughter “who was understandably confused between virtual goods and real currency for in-app purchases inside a free iPhone application” rang up nearly $400 in in-app purchase while playing the game Tapfish.

The proposed settlement is pending court approval on March 1.

Source: The Guardian