The Federal Trade Commission announced on Wednesday that it has reached a deal with Apple over the company’s alleged failure to provide proper notice to parents when their children racked up app-related purchases on devices like the iPhone and the iPad.
“Children ran up millions of dollars without their parents’ knowledge and consent” said FTC Commissioner Elizabeth Ramirez on a conference call, and stated that Apple had failed to comply with an obligation to “obtain consumers’ informed consent before charging them for goods and services.”
Ramirez also announced that Apple would pay at least $32.5 million to refund parents whose children accrued purchases without their consent; she described the amount as a “floor,” meaning that any unclaimed money below that amount will go to the FTC. Under the deal, Apple must notify users who can then submit a claim. It also requires Apple to change its billing practices:
The settlement requires Apple to modify its billing practices to ensure that Apple obtains consumers’ express, informed consent prior to billing them for in-app charges, and that if the company gets consumers’ consent for future charges.
The settlement also calls attention to an earlier Apple policy, no longer in effect, that permitted a 15-minute window following an app download in which users could make an in-app purchase without entering a password.
Children’s use of in-app purchases attracted widespread attention after the TV show The Daily Show ran a segment about a man whose kids ran up hundreds of dollars in credit card bills in order to keep digital animals alive. A similar event befell my colleague Kevin Tofel, whose step-daughter spent $375 on digital fish.
This isn’t the first time Apple has had to pay up over the app practices. In February last year, the company settled a class action settlement in which it agreed to pay parents iTunes credits over unauthorized purchases, and cash if the purchases amounted to more than $30.
This story was updated at 12:38pm ET to provide additional details about the FTC and class action settlements.