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Apple will pay out $32.5M to settle FTC iTunes complaints

Michael Cooney | Jan. 16, 2014
Apple today agreed to pay $32.5 million to settle complaints the Federal Trade Commission said the company billed consumers for millions of dollars of charges incurred by children in kids' mobile apps without their parents' consent.

In a memo from Apple CEO Tim Cook, obtained by website 9to5Mac, Cook states:

"Last year, we set out to refund any in-app purchase which may have been made without a parent's permission. We wanted to reach every customer who might have been affected, so we sent emails to 28 million App Store customers anyone who had made an in-app purchase in a game designed for kids. 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.

"From the very beginning, protecting children has been a top priority for the App Store team and everyone at Apple. The store is thoughtfully curated, and we hold app developers to Apple's own high standards of security, privacy, usefulness and decency, among others. The parental controls in iOS are strong, intuitive and customizable, and we've continued to add ways for parents to protect their children. These controls go far beyond the features of other mobile device and OS makers, most of whom don't even review the apps they sell to children.

It doesn't feel right for the FTC to sue over a case that had already been settled. To us, it smacked of double jeopardy. However, 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."

Interestingly, one of the FTC's own commissioners issued a dissenting opinion about the settlement.  

Commissioner Joshua Wright stated: "There is no disagreement that the overwhelming majority of consumers use the very same mechanism to make purchases and that those charges are properly authorized. The injury in this case is limited to an extremely smalland arguably, diminishing subset of consumers. The Commission, under the rubric of "unfair acts and practices," substitutes its own judgment for a private firm's decisions as to how to design its product to satisfy as many users as possible, and requires a company to revamp an otherwise indisputably legitimate business practice. Given the apparent benefits to some consumers and to competition from Apple's allegedly unfair practices, I believe the Commission should have conducted a much more robust analysis to determine whether the injury to this small group of consumers justifies the finding of unfairness and the imposition of a remedy."

 

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