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Apple CEO Cook Not Happy About $32.5M FTC Deal: How to Get a Refund if You've Been Bilked by In-App Purchases

First Posted: Jan 16, 2014 06:02 PM EST
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You've probably heard about the kid that ran up his parents' iTunes bill into the thousands in just minutes by buying upgrades offered within free games on iOS devices. Karma just caught up to Apple, which has agreed to refund at least $32.5 million to users who were conned by apps that trick kids into spending their money without their consent or knowledge.

Apple didn't agree to the massive refund amount simply out of the warmness of its incorporated heart -- it was part of a settlement with the Federal Trade Commission (FTC).

The FTC announced the refund on Wednesday, along with other terms of the settlement of the FTC's complaint that Apple violated regulations by failing to tell parents that by entering their password once for a single in-app purchase, they were also authorizing 15 minutes of unlimited in-app purchases that their kids could make without any further action by the parent.

In-app charges, even within initially free-to-download games and apps, can range from $0.99 to $99.99 per in-app charge. That can add up quickly, especially if a kid wants to amass a large amount of in-app currency and doesn't understand that those purchases cost real money. Within that short 15-minute time span, for example, one user reported that her daughter had spent $2,600 in the app "Tap Pet Hotel."

The settlement will give back consumers the reported millions of dollars in unauthorized charges of various amounts that have been reported to the FTC. Under the terms of the settlement, Apple must also modify its billing practices to ensure that the company is granted the account holder's express, informed consent before billing them for in-app charges, and customers have to be able to withdraw their consent at any time. Apple has to make these changes by Mar. 31, 2014.

Also under the terms of the settlement, Apple must provide full refunds totaling a minimum of $32.5 million to customers whose kids incurred in-app charges -- either accidentally authorized or not authorized at all by the account holder. If Apple's refunds to consumers within the next 12 months haven't reached the $32.5 million mark, the company still has to pay the rest of the unclaimed sum as a fine to the FTC.

But under the terms, could end up paying out more than $32.5 million. Apple has to refund the money promptly, upon request from the account holder, and is also required to give notice of the availability of refunds to all customers who have previously been charged for in-app purchases with instructions on how to obtain a refund.

If your child has previously run up an in-app bill on an iOS game without your knowledge, you can contact Apple through the iTunes Store and ask for a refund -- even if you don't get an email about the FTC refund process from Apple. It's pretty easy: just click on the "report a problem" link on your iTunes receipt or purchase history, enter your user information, and follow the prompts to "I inadvertently purchased this application," and write a small comment explaining that you child bought in-app features without your knowledge or permission. For an illustrated step-by-step guide, check here.

For its part, Apple isn't happy about the FTC settlement. For one, Apple has settled with class action lawsuits in the past over the same issue, and began reimbursing angry parents starting last year. The FTC settlement is separate from that process, though, and CEO Tim Cook was reportedly not happy about the added task. In an internal memo, according to Gamasutra, Cook stated to employees, ""It doesn't feel right for the FTC to sue over a case that had already been settled. To us, it smacked of double jeopardy. However, the consent decree the FTC proposed does not require us to do anything we weren't already going to do, so we decided to accept it rather than take on a long and distracting legal fight."

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