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Apple settles lawsuit over apps aimed at kids — will pay $5 iTunes credit or cash

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Did your kid rack up  charges on Apple’s (s aapl) app store without your permission? You may be in luck: the company says it will pay to settle a lawsuit over so-called “bait apps,” which are games that can be downloaded for free but then charge for “game currency” like virtual goods or play money.

Under the terms of the settlement, Apple will offer a $5 iTunes credit to those who claim that a minor bought in-game items without their knowledge or permission. If the amount in question is more than $5, Apple will offer a credit for that amount. If the amount in question is over $30, an Apple user can claim a cash refund.

The proposed settlement comes after parents sued Apple in 2011 upon discovering that their minor children had racked up credit card charges in supposedly free games. The issue was the subject of a Daily Show feature about a father whose kids racked up hundreds of dollars to keep virtual fish alive in a game called “Tap Fish.” The same problem also befell GigaOM’s Kevin Tofel whose kids spent $375 — also on virtual fish.

In order to collect under the settlement, Apple users will have to attest that a minor bought “game currency” and that the user did not provide the minor with the Apple password.

The proposed settlement, first reported by Law360 (subscription required), does not state how much Apple will pay in total or how many users are affected. It does state that Apple will send an email notice to “over 23 million iTunes account holders who made a Game Currency purchase in one or more Qualified Apps.”

The settlement still must receive preliminary approval from a federal judge. If that occurs, which it typically does in class action cases, the notification period will begin and Apple will begin accepting claims. After the claims are in, a judge will approve the final settlement and Apple will begin making payments — this would likely occur late this year or in early 2014.

Apple did not immediately reply to an email request for comment.

You can read the proposed settlement yourself below (I’ve underlined some of the key parts) :

Apple’s Bait App Settlement by

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16 Responses to “Apple settles lawsuit over apps aimed at kids — will pay $5 iTunes credit or cash”

  1. C. Hays

    Apple is still endorsing this unethical business practice. Before I read a little about this I had sent a complaint about unauthorized charges and as of today they have not responded to the company’s “bad business” practice.

  2. ChristiaanHoogerwerf

    Maybe my story can help a little to make the nuances. I am a parent of two children and, having finished Technical University, you can’t call me ‘stupid’. Two years ago I bought an iPod for my son and made an account on iTunes. To make it work it was obliged to attach it to my creditcard. And yes I put a password on it and NO, my children didn’t know my password. But on these iPods, at that time, you needed to login on iTunes to do updates. And after the update, your are logged in for about an hour. But it’s not mentioned. And at that time I didn’t know about the existence of in-Apps. My son played a smurf-game and you can collect berries with that game. But you can buy them as well with an in-App. And of course he ordered a ‘Wagon full of berries’ for €80,- ($100,-) and ordered some more bags of berries for a total of €16,-. In the evening I got a mail from iTunes and i was shocked, because I didn’t know what happened and I didn’t know if it was a single purchase or was it a monthly fee? I tried to find out from which game and noticed that at this Smurf-game the berries you can gain (for free) look very much like the ones you have to pay for by this in-App. The price of the in-apps is in bright -happy colors and the icon for ‘€’ is not very obvious. I can understand that games cannot be ‘for free’ always, but offering the game for free and steel the money with these kinds of numbers, I think it is criminal: 80€ for imaginary berries. I was lucky that he didn’t order 5 times in a row for €80. And trying to complain doesn’t work. I couldn’t use the application form on iTunes nor Apples website! It was simply not working. That is my story.
    Christiaan (The Netherlands)

  3. I’d rather see parents take responsibility for their own actions rather than find someone else to blame. I and other parents I know don’t have this problem despite letting their kids use their iOS devices all of the time for years.

    Apple fell on their sword here to stem bad PR.

    One parent I know just ties their kids iOS device to a pre-paid gift card. The worst that could happen is the kid maxes out the $10 pre-paid card.

  4. Unfortunately, this is the model that Apple wants for apps. It’s by no means limited to bait and switch apps. It’s the model that Apple encourages for apps now, and is why they are more frequently featured.

    I’ve developed over a iOS hundred apps and three games. If you’re launching a game for kids using an in-app purchase model and virtual currency is almost a must-have if you want Apple to display your app in a feature or app collection. It is clearly the preferred pricing model as it has such tremendous revenue potential. Personally, I don’t like it, as all three of my kids have made in-app purchases.

    If you’re not in one of those app placements, your app is lost to the abyss, buried behind one of the worst content search engines in use today.

  5. am pretty sure apple have the option to turn off in app purchases plus its the parent responsibility to keep the password away from the child its just common sense, i know with android if u dont set a pin anyone can buy anything from the play store without a password however with apple u need a password to buy stuff so how can the parent blame apple for their stupidity giving their kids the password

    • Yep you’re right. I have two kids (5 & 11) who both have iPods, I have an iPad2 and my wife has an iPhone 4gs. There is an option to password protect app purchases and to switch off in App purchases under the restrictions settings.

      The thing is, not all parents are technically minded to know to switch on these restriction settings and they aren’t savy to the bait apps.

      I don’t think it’s stupidity as such, but is certainly ignorance to current app practices and options open to them.

      If parents applied a little common sense this might never have happened, however “the thing about common sense is, it’s not that common” that’s why we have lawsuits such as these.

  6. Oh my gosh. Be a parent, will you? You bought your son an iPad [dumb], then you attach your credit card to HIS account [dumb], and then you dont turn off in app purchases, [DUMB] and then you dont watch what he is doing for several hours, while on the internet on a tablet [dumb]

  7. I bought my son a iPad, created a iTunes account for them and added my credit card to the account. After a few hours he had made 1000 in In App purchases without my permission.

    How could Apple allow this to happen :-p

    It’s called personal responsibility people. Only in America would people expect to be compensated for their own stupidity.

  8. My kid spent upwards of $900.00 in a two hour window. She is only 7 years old. They did credit my account after 3 hours on the phone with them. There is no way it should be that easy for kids.

  9. Kevin Haah

    It is so sad that the lawsuit is being settled without an injunction against such game currency!! If you look at the games, it is designed for little kids, and they are dangling them with game point if they use real money. How could they allow such game to continue to be sold from iTune. This is absolutely crazy!

  10. You forgot to mention that the parent in the daily show clip isn’t eligible for the refund because:
    1) he got his money back 2 days after the incident happened (months before he did the daily show clip).
    2) he had given his kids the password to his itunes account, which they happily used.

    Both of these things came out in the phone call with the parent in the Daily Show during filming, but they didn’t bother to show that because it would’ve made the segment less funny and your casual viewer (who doesn’t bother to read) might have been less “outraged”.

    You can read all about it here in Top 10 Things The Daily Show Got Wrong About Tap Fish: