Apple (s AAPL) came under fire last year from parents whose children had racked up credit card charges on apps that were supposed to be “free.” Apple tried to throw out a lawsuit over the apps but has come up short after a judge found the parents suffered sufficient harm to pursue the case.
The apps in question are known as “bait apps” and refer to children’s games that are available for free in the iTunes Store but that also allow players to buy virtual goods as in-app purchases while playing the game — anything from coins to fish to prizes.
Normally, an Apple user has to enter a password before they can buy a virtual good. But in the case of the “bait apps,” Apple allowed a 15-minute window after the game was downloaded in which players could buy what they liked without a password.
In practice, this meant that kids were able to rack up bills from $99.99 to $338.72 on their parents’ iTunes accounts. Apple has since eliminated the 15-minute window.
Last year, a federal judge in California consolidated a series of class action suits from parents which Apple then filed to dismiss.
U.S. District Judge Edward Davila responded to Apple’s request by upholding four of the parents’ five claims, including allegations that Apple violated consumer protection laws by falsely marketing the apps as free:
Contrary to Apple’s argument, Plaintiffs have alleged with specificity which misrepresentations they were exposed to, their reliance on those misrepresentations, and the resulting harm. Plaintiffs pled specific facts that Apple “actively advertis[ed], market[ed] and promot[ed] its bait Apps as ‘free’ or nominal .
The judge’s refusal to dismiss the case does not mean the parents will win, but it does increase the pressure on Apple. The company is relying on contract law arguments such as whether each in-app purchase was a transaction or (as Apple argues) whether the overall iTunes terms of service should apply to all the purchases. There is also a dispute about how contract law applies to minors.
Apple is expected to file its defense on May 24.
Apple’s terms of service say iTunes users are responsible for ensuring that their accounts aren’t misused by others.
The issue of children racking up in-app purchases has been a big source of frustration for parents, including our own Kevin Tofel whose step-daughter bought the family $375 worth of digital fish. (See his tips on how to handle this here).
Digital fish seem to be a particular hazard. Comedian Jon Stewart recently interviewed a man whose kids also racked up huge credit bills in the game Tap Fish in hopes of keeping their pets alive: