January 15, 2014 – The Federal Trade Commission today announced that Apple has entered a settlement agreement containing a consent order to settle the FTC’s complaint alleging that the company billed consumers for charges incurred by children in kids’ mobile apps without their parents’ consent. Under the agreement, Apple will refund at least $32.5 million to customers whose children made in-app purchases without adequate parental consent.
In addition, the settlement requires Apple to obtain express, informed consent from consumers before charging them for in-app purchases and allow the consumers to revoke that consent at any time. The FTC alleged that Apple did not inform account holders that entering their password would allow children to incur unlimited charges with no further action from the account holder during a 15 minute window and often presented a screen with a prompt for a parent to enter his or her password in a kids’ app without explaining to the parent that doing so would finalize any purchase at all.
One FTC Commissioner dissented from the settlement. In a statement published on the FTC’s website, Commissioner Joshua Wright said that the FTC’s allegations involved “a miniscule percentage of consumers” and concluded that “any injury to consumers flowing from Apple’s choice of disclosure and billing practices is outweighed considerably by the benefits to competition and to consumers that flow from the same practice.”
Written by Bruce Sarkisian, Associate, Privacy & Data Security | Alston & Bird LLP