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Apple Inc. to refund $32.5M for App Store charges

 The Apple logo is displayed on the exterior of an Apple Store on April 23, 2013 in San Francisco, California. (Justin Sullivan, Getty Images)
The Apple logo is displayed on the exterior of an Apple Store on April 23, 2013 in San Francisco, California. (Justin Sullivan, Getty Images)
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Updated: 1/16 8:41 pm
NEW YORK, N.Y. (AP) -- Apple Inc. will refund at least $32.5 million to parents who incurred what the Federal Trade Commission said were excessive, unexpected in-app charges from children's games from the company's App.

The FTC on Wednesday also ordered Apple to change its billing policies to ensure customer protection. The charges stemmed from what the commission said was the company's failure to "obtain parents' informed consent to charges incurred by children."

Apple offers many children's mobile apps in its App Store that allow users to incur charges within apps. Many of the charges are for virtual items or currency used in playing a game. These charges generally range from 99 cents to $99.99 per in-app charge, according to the FTC in its settlement with Apple.

According to the commission's complaint, Apple does not tell account holders that entering their password will open a 15-minute window in which children can incur unlimited charges with no further action from the account holder.

FTC records indicate that several thousand claims were filed against the company and many didn't know of the 15-minute window, which has been in place since the App Store launched in 2008.

Apple CEO Tim Cook, in an internal email, said the company received 37,000 complaints and intended to reimburse those customers.

"Last year, we set out to refund any in-app purchase which may have been made without a parent's permission," Cook said. "We wanted to reach every customer who might have been affected, so we sent emails to 28 million App Store customers...."

One girl reportedly spent more than $2,600 on the "Tap Pet Hotel" application using her mother's card, according to FTC documents.

The FTC expects Apple to inform all customers of the reimbursement opportunity and instruct customers on how to get refunds. Changes to company policy must occur by March 31 and any of the $32.5 million not used to reimburse customers will be remitted to the FTC.

"This settlement is a victory for customers harmed by Apple's unfair billing," FTC Chairwoman Edith Ramirez said in a statement. "You cannot charge consumers for purchases they did not authorize."

Cook, of Apple, said the company was prepared to make changes prior to the commission's involvement. "The consent decree the FTC proposed does not require us to do anything we weren't already going to do," he said.
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