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Apple sets aside $32.5 million to refund customers for unfair in-app purchase billing

Cupertino has settled a FTC complaint regarding its unfair billing practices when it comes to in-app purchases.

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Most applications these days offer in-app purchases, if its a game, users have the option to spend real money to get virtual credits, unlock new levels or characters, other apps might hide advanced features behind a similar paywall. There have been numerous reports about how kids have ended up spending hundreds of dollars on in-app purchases without their parents knowing or consenting to said purchases. This usually happens because when a user consents to an in-app purchase by entering credentials, there’s a 15 minute window in which subsequent purchases can be made within an app without requiring authorization. So if parents authorize just one in-app purchase for their kids, there’s a 15 minute window in which the kids can continue to make purchases. FTC Chairwoman Edith Ramirez calls this an unfair billing practice, and says that consumers enjoy fundamental consumer protections regardless of where the business is being conducted, in the online arena or in a physical store.

Apple is found to have violated the FTC Act by not informing users that after they authorize a single in-app purchase, there’s a 15 minute windows in which subsequent purchases can be made without their consent and authorization. Apple has agreed to settle and has earmarked a “floor” amount of $32.5 million which will be used to refund customers harmed by said billing practise. The company will notify users that are eligible, who will then file a claim. Any unclaimed money below $32.5 million after refunds will be surrendered to the FTC.

Moreover, Apple has also agreed to modify its billing practice. Presumably the company will now warn users about the window, perhaps it might reduce the time limit or it may also require users to authorize every single in-app purchase. FTC has given Apple until March 31, 2014 to make changes.

Source: FTC

Adrian Fonseca
Adrian Fonseca keeps a close eye on all Apple news, rumors, leaks and developments. In his spare time, he likes to read books.

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