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Apple to Offer iTunes Credits Over In-App Purchases Lawsuit

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Smurfs' Village on iTunes

Smurfs' Village on iTunes

Apple will pay out over $100 million in iTunes credits to those affected by in-app purchases made by children without their parents’ permission.

We first told you about this lawsuit in April 2011:

Apple has been sued by a class of parents who claim the software giant is wrongfully profiting on in-app purchases within certain free applications — a process the complaint (PDF) calls a “bait and switch.”

The so-called “freemium” applications are available for download at no cost, but within them are opportunities to purchase — with real money — virtual currency and other items useful for playing the games, which are often geared toward children with names like “Tap Fish,” “Tap Zoo,” “Sundae Maker,” “Zombie Café,” and “The Smurfs’ Village.”

The parents claim that these “highly addictive, designed deliberately so” games are “inducing” their children to rack up charges on their parents’ credit cards, sometimes totaling in the hundreds of dollars; for instance, a wagon full of “Smurfberries” costs $99.99 and can be used to build up Smurf huts and more on The Smurfs’ Village.

While normally buying applications on the iPhone requires entering an iTunes password, in older versions of the operating system, there was a 15-minute window that allowed further purchases without re-entering a password. Complaints of this set-up led to an investigation by the FTC, which agreed “that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases.”

Following the filing of the lawsuit, Apple did institute stricter controls for such in-app purchases, and now Apple will give iTunes credits to the approximately 23 million people who have been adversely affected; each will receive a $5 credit, but larger credits are possible if account holders can show their charges totaled more than that. For those whose bills reached over $30, Apple will offer cash refunds.

The settlement still must be approved by a federal judge.

What do you think of this settlement?

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February 27th, 2013 at 9:42 am