The US Federal Trade Commission – FTC – says Apple has also agreed to modify its practice – which until now had allowed children to make purchases on a mobile device 15 minutes after a password was entered.
FTC chairwoman Edith Ramirez says Apple failed to inform parents of the 15-minute window that could allow children to make purchases ranging from $1 to $100 for each app.
Ms Ramirez says that because of the loophole, “children ran up millions of dollars in charges without their parents’ knowledge and consent,” a violation of federal rules, saying that “consumers will be obtaining full redress” for any unauthorised charges ::::
Ms Ramirez says the FTC believes there are “many thousands of consumers which were impacted” and could get refunds. She says the consent decree signed with Apple sets a minimum of $US32.5 million ($36 million), with no maximum.
But if the refunded amount is less than $US32.5 million, the balance will be paid to the regulatory agency.
Apple chief executive Tim Cook says the company has already been following the practices requested by the US regulators.
“The consent decree the FTC proposed does not require us to do anything we weren’t already going to do, so we decided to accept it rather than take on a long and distracting legal fight,” he wrote in a letter to employees obtained and posted by the website 9to5mac.
Mr Cook’s memo says Apple had “heard from some customers with children that it was too easy to make in-app purchases, so we moved quickly to make improvements”.
He says the company sent emails to 28 million App Store customers offering refunds and that “when some emails bounced, we mailed the parents postcards”.
“In all, we received 37,000 claims and we will be reimbursing each one as promised,” Mr Cook said in the memo.
However, Ms Ramirez told reporters the FTC settlement “provides more robust relief” than Apple’s voluntary actions. She says under the agreement, Apple must notify parents of the 15-minute window that allows further app purchases after a password is entered.
Ms Ramirez declined to comment on any other investigations, but says the agency “is obviously concerned” about other companies in the mobile space where children may be able to make purchases without parental consent.
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