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Apple Settles with FTC

Apple has reached a settlement with the Federal Trade Commission (FTC) after a long legal battle that challenged Apple’s App Store’s basic functionality.

Very few parents know of the “parental control” options buried in Apple devices and when you allow one purchase, you have a 15 minute window in which you have unlimited transactions. FTC Chairwoman Edith Martinez said that in one case, a girl spent more than $2,600 in that 15 minute window, using the app "Tap Pet Hotel."

As a result of these insufficient parental control options, Apple is required to refund customers who have been billed for faulty charges, paying out a total of $32.5 million to 37,000 different customers. It is also required to change its billing practice to ensure that express informed consent has been given before charging for items sold in mobile apps. The settlement also requires apple to modify its billing practices to allow for more explicit consent, with new safeguards in place no later than 31 March 2014.

In a letter to 9to5mac Apple CEO Tim Cook said it “does not require us to do anything we weren’t already going to do.” Apple was getting complaints of in-app purchases that occurred without a parent's permission. In response to this, the company emailed every iOS user that had made an in-app purchase in an app designed for children, 28 million accounts in total. 37,000 people responded that this was in fact true and were reimbursed for the purchase.

Apple could easily have argued that once payment details were stored on the child’s device, they are giving the children full access to the device as it does not require a password. It will be interesting to see if Google has any repercussions as its Google Play window for purchase is 30 minutes.