Apple to refund £20m to parents for in-app purchases


Technology giant offering payments to parents of children that unwittingly ran up large bills following a settlement with the US Federal Trade Commission

Apple is to refund more than $32.5 million (£20 million) to tens of thousands of customers who complained they unwittingly allowed their children to build up large bills through in-app purchases.

The settlement comes after a complaint from the US Federal Trade Commission (FTC), which said Apple failed to inform parents they were approving in-app purchases by entering their password.

It added that children could then make unlimited purchases for up to 15 minutes without their parents’ approval.

Apple is now required to change its billing procedures to ensure customers have given consent before they are charged with in-app purchases and enable them to withdraw their permission at any time. The FTC said the changes to Apple’s billing processes must be in place before March 31.

In-app purchases on the iPhone and iPad can consist of add-ons for virtual items, extra features and additional levels for games. They typically cost between $1 (61p) and $99 (£61).

FTC chairman Edith Ramirez said: “This settlement is a victory for consumers harmed by Apple’s unfair billing and a signal to the business community.

“Whether you’re doing business in the mobile arena or the mall down the street, fundamental consumer protections apply. You cannot charge consumers for purchases they did not authorise.”

Apple has so far offered 37,000 refunds after sending emails to 28 million customers last year who may have been affected.

In an internal email to staff, Apple CEO Tim Cook said: “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.”

Earlier this month Apple revealed that its App Store had generated more than $10 billion in sales last year – a record for the company.

The Apple App Store offers more than one million applications in 24 categories for the iPhone, iPad and iPod touch in 155 countries.