Apple Inc. (AAPL) Pays $32.5M To Parents In App Overcharging Case

Apple Store Upper West Side NY

Apple Inc. (NASDAQ:AAPL) will refund at least $32.5 million to resolve the issue related to the complaint by the U.S. consumers that they were being charged for the apps, which children bought without consent from parents.

Apple kept vital info away from users

The U.S. Federal Trade Commission (FTC) noted that Apple will need to modify its billing conditions certify that consumers are paying for the apps, which they purchased from their phone’s App store.

“Whether you’re doing business in the mobile arena or the mall down the street, fundamental consumer protections apply,” said FTC Chairwoman Edith Ramirez. The chairwoman said that one cannot charge consumers for purchases they did not know about.

According to Ramirez, commission has received “tens of thousands of complaints” from consumers regarding the unauthorized purchase of Dragon Story and Tiny Zoo Friends.  In its complaint, FTC noted that Apple kept the information away from the account holders that after punching the passwords in the company’s App store, a 15 minute window pops up where kids could incur unlimited charges.

Ramirez said that the issue is not that Apple Inc. (NASDAQ:AAPL) opens a 15 minutes Window for in-app purchase, rather they are appealing against the claim that users are not informed about the existence of the Window. Chairwoman said that when parents enter the password they do not know that for what all they can be charged for.

Stocks unaffected

CEO Tim Cook released an internal memo to the employees saying that the company will prefer settling the matter by compensating the customers rather than fighting a long legal battle because the FTC proposals were in line with company’s own intended changes.

Apple Inc. (NASDAQ:AAPL) spokesman Steve Dowling said that protecting children is on the top of the list for Apple, and the company is proud to have various standards for online stores by making the App store a safe place for customers.

David Balto, a Washington-based attorney, who was previously a policy director at the FTC said that Apple should be ready to face these situations even though it is the world’s biggest company by market value.

The government “knows perfectly well that a case against Apple sets rules for the road,” he said. “If they are willing to go against Apple it shows they are willing to go against anybody.”

Apple stocks were almost unaffected by the news, and in midday trading on Wednesday, it was 2.4% above at $556.69, holding onto gains posted earlier.