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Plot thickens in Apple “bait apps” case

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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 ruling was issued last week but didn’t attract attention until Seattle tech lawyer Venkat Balasubramani wrote about it on Eric Goldman’s Law and Marketing Blog.

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:

11 Responses to “Plot thickens in Apple “bait apps” case”

  1. Jason Hanson

    Parental controls are on most every device, and has been on iTunes since its spawning. Blaming Apple for having a window of convenience for users or the Apps offered using micro transactions is stupidity of the parents. They allow them to watch TV unattended, movies unattended, music unattended, use expensive SOFTWARES and hardwares unattended…and without setting up parental parameters beforehand…then cry when hindsight slaps them into reality, though it was made available to them beforehand. And they will be the first to claim they are capable of determining what items or content their child can access. Well…you determined it either correctly or incorrectly…because they accessed it through your own lack of good judgement by setting up the parental controls on the device AND on the iTunes software…and right or wrongly it was through your ‘parenting’. Hell, even World of Warcraft has parental settings even!

    • Jason – regarding the parental parameters, how should a parent do that without being over the child’s shoulder at all times? I recently checked out Famigo Sandbox which does just that and allows the child to add games to a wish list. Pretty cool

      • Pixwhite

        As a parent and iPhone owner, I can safely say that way too many parents give their kids the phone to placate them or get some “quite” time and I find it a pretty disturbing abdication of Parental responsibly.

        That said, Apple would be wise to implement either multi-user or multi-profile features on the phone so that parents could switch the phone to kid mode with a single setting instead of going through a hundred different parental control options prior to giving the phone over.

        I think Apple doesn’t want people sharing devices and instead wants them to have their own and so won’t put this very useful and easily implemented option in place any time soon.

  2. What do you mean CHILDREN?

    Adults can fall for the ploy since using an app that has limited functionality will have pop-up ads for improved service by clicking on an icon. One such is Paper which has only a pen. When a paint brush or pencil or other tool is selected, the user is prompted to get it for $1.99 each.

    It’s not just the children who can be taken in by some of these bait apps.

  3. Concerned

    It disgusts me how irresponsible parents are these days, and how our court system encourages this kind of stuff. This case is like a parent suing a liquer store because they left a bottle of jack on the table and their kid went and got drunk. It’s completely rediculous! People need to become more aware and more involved in their children’s lives instead of letting them have free reign on everything, and then suing someone else when they get into trouble. Take responsibility folks!!

  4. oriorda

    One of the regular annoyances I experience is being forced through hoops which are irrelevant to me because I am responsible, but are put in place to protect the stupid from themselves. A small example is the pollution of the environment with idiotically self-evident signs that some do-gooder has decided people need to see. Things like ‘Pavement may be slippery after rain’. Right. I needed to know that, and you needed to put an ugly 2 foot sign up to be sure I got the message. Perhaps the most stupid I ever saw was in a Tahoe hardware store: next to the ammo cage where a sign read ‘The FDA has determined that the lead in ammunition is poisonous when eaten.’

    And so it’s no surprise that Apple and others have to put restrictions in their products that just annoy me but presumably protect some idiot somewhere down the line. Like prompts for a password every time you click the Buy button. Nuts.