Apple’s Cook settles with FTC over kids’ In-App Purchases rather than endure legal fight

“Apple Inc will refund consumers at least $32.5 million to settle a longstanding complaint that the technology company billed U.S. consumers for charges incurred by children through mobile apps without their parents’ consent,” Diane Bartz and Alina Selyukh report for Reuters. “Under the terms of the settlement, announced on Wednesday by the U.S. Federal Trade Commission, Apple also will be required to change its billing practices to ensure it obtains consent from parents before charging for such in-app spending. In a memo to employees, Apple CEO Tim Cook referred to a class action settlement reached in June which required the company to pay around $100 million to parents whose children made unauthorized purchases. ‘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,’ Cook wrote. ‘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.'”

“The FTC complaint alleges that Apple does not inform account holders that entering their password in the company’s App Store opens a 15-minute window in which children can incur unlimited charges with no further action from the account holder,” Bartz and Selyukh report. “While the refunds will be available for purchases through apps aimed at children, all Apple apps will get new disclosures, the wording of which has not yet been finalized. ‘To be clear, the issue is not that Apple opens a 15-minute window for in-app purchases,’ said FTC Chairwoman Edith Ramirez. ‘What we challenge is the fact that Apple does not inform users of the existence of the window. When parents enter a password, they do not know the full scope of charges they could incur.'”

“‘Protecting children has been a top priority for the App Store from the very beginning, and Apple is proud to have set the gold standard for online stores by making the App Store a safe place for customers of all ages,’ said Apple spokesman Steve Dowling,” Bartz and Selyukh report. “The commission vote to accept the consent agreement package was 3-1, with Commissioner Joshua Wright, a Republican, voting no. In a statement, Wright argued that the FTC failed to show that the “extremely small” group of consumers who were injured justified a finding that Apple was unfair.”

Full article here.

Related articles:
Apple refunds 8-year-old girl’s $6,000 bill for in-app purchases – July 21, 2013
Apple notifies parents of In-App Purchase settlement details – June 24, 2013
In-App Purchasing lawsuit against Apple allowed to proceed – April 21, 2012
Parents sue Apple over in-app charges – April 16, 2012
Lack of parental controls on Amazon’s tiny screen Kindle Fire lets kids charge up a storm – December 12, 2011
Freemium and Apple’s App Store: The in-app purchasing model really works – October 14, 2011

61 Comments

  1. President Obama needs to call all his rabid dogs off Apple NOW!

    Apple should be America’s one source of pride for ethics, innovation and education. Apple gives consumers quality assurance, products and service 100% of the time all the time.

    Shame on You Mr. president for allowing and embracibg an unorganizied, unmerrited and baseless witch hunt and parade of hindering litigation against this model citizen of the USA.

    I withdraw any respect I ever had for you.

    1. Your enlightenment is admirable, but it is too late. The best definition of statism: the cream is sucked to the bottom and former chicken farmers rule. The malaise that always occurs when deceit leads. This is the United States of America in 2014. It won’t see 2015.

    2. Umm…you know that would be really bad, right? What kind of precedent would it set to have the President going to bat for a private company?

      And by the way, what does this have–directly–to do with Obama? You seem to be envisioning a relationship that’s more like that that exists between a parent and their child than more anything based in reality.

      And you’ll notice that I am not even talking about the merits–or the lack thereof–of the the government’s case, only that you for some reason think that all the President has to do is to keep regulators off Apple, when there may be a valid reason (in this instance) for them to be doing what they’re doing.

      Apple settles the case, and moves on. $32 million is cheap for the goodwill it buys, as well as (in this instance) regulatory relief.

      You have to choose your battles. Apple is already engaged on multiple fronts (Samsung Vs. Apple, Google Vs. Apple, the current effort by Judge Koh).

      Do they really need to open another front?

      1. I think TC did the right thing settling.

        i think Federal dogs going after Apple for no good reason but a squeeze is contemptible and wrong.

        I think judges abuse their lifetime tenure and are corruptible because of that.

        I think judges should not not unchecked and unaccountable to the system that appoints them and their fist and foremost duty is to factual truth and justice.

        The president has oversight and control of over zealous federal dogs.

        Apple is a model corporate citizen in every category possible and is a victim of misrepresented and fabricated lies.

        1. I think judges should not not unchecked and should be held accountable to the system that appoints them and that their first and foremost duty is to factual truth and justice.

          1. If you were one of the writers of the constitution, how would you assure, legally, that excesses of the judicial system were checked into balance by the other two branches of government? Or better yet, the people?

            1. My solution would be that EVERY federal appointee should be subject to recall by a minimum percentage (10%) of the petitioned electorate that finances them, without recourse by any of the three branches of government. As you may already know, Madison fought for a similar concept. I am interested in what you would propose.

            2. Each branch and it’s members should be collectively and individually accountable for the parameters and factual implementation of their specific duties. There should be a verifiable factual and truthful log/record of all activities by which members of that branch live and die, so to speak, and keep their jobs. There should be automatic consequences for corruption, dishonesty, self serving actions and obstruction. That’s the general idea, principal etc…with no ambition or pretense to have all the answers…

            3. First you need verification of facts then some kind of ‘objective’ voting system, then you’d have people screaming ‘ big government’ and regulationetc…

              Your proposition has a seed of possibility but really the key to everything working properly is integrity. Utopia?

            4. thank you for your thoughtful response. Integrity cannot be mandated, but it can be nurtured through law that reflects the will of the people. Maybe that’s the problem…the lack of integrity in the will of the people.

            5. a clarification, if needed: the petition would require a 10% of the affected electorate in a petition, a majority vote to recall the official. If this were law, the Lucy Koh’s, the Eric Holder’s, the Hillary Clinton’s would be out on their asses within a month.

        2. That’s just the thing, and while I also think Tim Cook did the right thing, I don’t claim to know enough about Apple to understand why the FTC went after them. In other words, just because it’s government doesn’t by definition mean that what one of its agencies is doing is necessarily wrong; also doesn’t, by definition, mean that it right, either.

  2. While I don’t have any children (so having them buy apps ins’t an issue for me) I fail to see how this is an example of Apple being “…stabbed in the balls…”

    Bizarre imagery aside, some parents either allowed children access to their passwords (I am unaware of any other way a child could access the App Store. Every purchase I make I have to input my password) or the children gained access by other means, which enabled them to make expensive purchases on their parents dime.

    At heart, is this more a discipline issue than anything else?

    Sure it is. It’s not rocket science that children should not have access to the passwords that govern iOS devices. Parents should not give it to them for any reason, which would effectively end the problem.

    But that’s not what’s happening, which means that it was inevitable at some point that this would end up in Apple’s court (either by forgiving those that this happens to, or perhaps providing some sort of technology-based remedy–like individual accounts, or by paying a fine).

    Besides, you have to keep in mind that this isn’t the only issue in the news that relates to Apple recently (the iBooks monitor).

    If Apple shows themselves to be a reasonable corporate citizen, they may be able to sway opinion and against Judge Koh in that particular arena.

          1. let me do it for you, dickhead:

            citizen |ˈsitizən, -sən|(abbr.: cit. )
            noun
            a legally recognized subject or national of a state or commonwealth, either native or naturalized: a Polish citizen | the rights of every citizen.
            • an inhabitant of a particular town or city: the citizens of Los Angeles.

            corporation |ˌkôrpəˈrāSHən|
            noun
            a company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.
            • (also municipal corporation )a group of people elected to govern a city, town, or borough.

            do ya’ see the difference, stupid?

            1. no lawyer but as an investor I’ve often heard that corporations are treated as persons in several aspects of law.

              wikipedia:

              “Corporate personhood is the legal concept that a corporation may be recognized as an individual in the eyes of the law. This doctrine forms the basis for legal recognition that corporations, as groups of people, may hold and exercise certain rights under the common law and the U.S. Constitution. For example, corporations may contract with other parties and sue or be sued in court in the same way as natural persons or unincorporated associations of persons. The doctrine does not hold that corporations are flesh and blood “people” apart from their shareholders, officers, and directors, nor does it grant to corporations all of the rights of citizens.
              Since at least Trustees of Dartmouth College v. Woodward – 17 U.S. 518 (1819), the U.S. Supreme Court has recognized corporations as having the same rights as natural persons to contract and to enforce contracts. In Santa Clara County v. Southern Pacific Railroad – 118 U.S. 394 (1886), the reporter noted in the headnote to the opinion that the Chief Justice began oral argument by stating, “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.”[1] While the headnote is not part of the Court’s opinion and thus not precedent, two years later, in Pembina Consolidated Silver Mining Co. v. Pennsylvania – 125 U.S. 181 (1888), the Court clearly affirmed the doctrine, holding, “Under the designation of ‘person’ there is no doubt that a private corporation is included [in the Fourteenth Amendment]. Such corporations are merely associations of individuals united for a special purpose and permitted to do business under a particular name and have a succession of members without dissolution.”[2] This doctrine has been reaffirmed by the Court many times since….

              … Since the Supreme Court’s ruling in Citizens United v. Federal Election Commission in 2010, upholding the rights of corporations to make political expenditures under the First Amendment, there have been several calls for a U.S. Constitutional amendment to abolish Corporate Personhood,[7] “

            2. did you read what I cut and pasted:

              in some aspects Corporations ARE treated as persons by SUPREME COURT. The sort of over rules your dictionary refs huh?

              Jeeezus Christ God almighty!

              see I can curse just as good. Saying J.C doesn’t INCREASE YOUR LOGIC YOU KNOW?

            3. in the Supreme Court case in 2012 the Court reaffirmed that Corps in Montana can contribute political funding as they were ‘persons’:

              Atlantic:
              “Court chose instead to double down and reaffirm the conclusion of Citizens United that corporations are people — at least as far as the First Amendment is concerned.”
              ..
              that comes from the landmark case in 1800’s where the Sup. court ruled:

              “A state has no more power to deny to corporations the equal protection of the law than it has to individual citizens.””

              of course there are differences as Courts aren’t allowed the 5th to stop from testifying, can’t vote etc.
              but like I POLITELY first pointed out in SEVERAL ASPECTS the Sup Court does treat corps as people.

            4. @botvinnik

              “are you unable to discern between citizen and “persons”? Is this International Stupid Night?”

              you’re the one who is stupid dude,

              WHERE DID I SAY corps were Citizens?
              (you’re not just impolite you’re BLIND as well)

              I just pointed out that the Sup court treated them as persons. (But actually looking through it in many places corps are referred to as ‘Corporate Citizens’ — what the legal ramifications of it I don’t know. Is USA corp treated differently as a foreign corp? legal protections etc ?)

              The reason the Law treats Corps as people is so that it has some of the legal responsibilities as people , (you can’t sue a Rock for example)

            5. @botvinnik

              look at Brain McNeal’s original post
              “Apple shows themselves to be a reasonable corporate citizen,”

              PLEASE NOTE that the original poster called Apple a “CORPORATE citizen” which is different from your use of the word.

              Investopedia:

              “Definition of ‘Corporate Citizenship’:

              The extent to which businesses are socially responsible for meeting legal, ethical and economic responsibilities placed on them by shareholders. The aim is for businesses to create higher standards of living and quality of life in the communities in which they operate, while still preserving profitability for stakeholders.”

              Brian is exactly right using the term : Corporate citizen.

              who is the ” International Stupid ” NOW?
              you are the one who is dense dude…

            6. for your edification:

              sophist |ˈsäfist|
              noun
              a paid teacher of philosophy and rhetoric in ancient Greece, associated in popular thought with moral skepticism and specious reasoning.
              • a person who reasons with clever but fallacious arguments.

            7. “one more time, with feeling, a corporation is not a citizen.”

              one more time
              McNeal called apple a CORPORATE citizen which is exactly right terminology.
              go google it.
              You’re making yourself look silly.

            8. I don’t require “Google”, unlike yourself I have a dictionary and in that dictionary are definitions of words. Here’s a good place for you to start, assuming they still allow boneheads such as yourself around books; look up…citizen, corporation, Sophism, anal-retentive and most importantly: wrong.

            9. Forbes 2012:

              “100 Best Corporate Citizens”
              “We are delighted and proud to again be ranked No. 1 on CR Magazine’s annual list of the 100 Best Corporate Citizens,”

              IS FORBES wrong using the term?
              should they put into International stupid Night?

              as you like DICTIONARIES here’s a dic definition of CORPORATE CITIZENSHIP:

              1. The legal status of a corporation in the jurisdiction in which it was incorporated.
              2. A company’s role in, or responsibilities towards society. See corporate social responsibility.


              like I said McNeal use of the term was exactly right in his post.

            10. per my dictionary and ANY dictionary, there is a blank space when inputting the definition of “corporate citizenship.” For a second there, I thought it was an illustration of your brain functions.

            11. So ass head what does YOUR dictionary have on CORPORATE citizenships?

              LOL.

              (what irritates me is that not only are you wrong but you call people names and are too stubborn to see you big fat mistakes)

            12. as mildly distracting a diversion this exchange has been, I’m afraid I’m losing interest. Let it suffice you quote a popular business magazine for a term that has no definition in any dictionary. I wish you the best in your quest for a third-class mind. With work, you’ll get there.

            13. So all those thousands of articles referring to Corporate Citizenship (some companies even have ‘Corporate Citizen’ statements on their corporate websites) are ALL WRONG?

              lol
              Ask.com:

              “The definition of corporate citizenship is the extent of which a business is socially responsible for meeting the needs of all legal, ethical, and economic responsibilities that are placed on them by its shareholders.”

              the Conglomerate:
              “Global Corporate Citizenship (“GCC”) emerged in management and business scholarship in the 1990s. GCC posits that corporations have rights and obligations in society similar to citizens. It addresses the ethical responsibilities of companies operating in a global market and the values that should guide corporations’ engagement with society. In effect, GCC requires that corporations engage with both financial and societal stakeholders as well as acting as stakeholders themselves. ”

              another article specifically with Apple headlined:
              “Apple vs. Wal-Mart: Who Is the Better Corporate Citizen?”

              etc etc etc

              they are ALL wrong?

              you are the one screwing with the Citizen definition with the business def of the the word.

            14. @ botty

              BOEING has a CORPORATE CITIZEN section on it’s website:
              Boeing Corporate Citizenship:
              “We have one simple objective at Boeing: to make the world a better place.:

              So Botty Boeing with all it’s lawyers etc is Wrong Too using the term on it’s official website?

              The Royal Bank of Canada Website:
              “RBC scored first place in the “2007 Best 50 Corporate Citizens in Canada” ranking, according to Corporate Knights magazine. The ranking is based on an evaluation of the environmental, social and governance performance of Canada’s leading companies”

              So the RBC is Also WRONG using the term?

              SunLIfe Financial on their Website:
              “We’re committed to being a good corporate citizen a…,”

              ORACLE corp
              Corporate Citizenship statement:

              “The technology industry is critical to global progress and prosperity, and Oracle’s corporate citizenship …”

              etc etc

              All of them including Oracle is wrong?

              But Botvinnik with his little dictionary is right?
              lol

            15. @botty

              EXXON MOBILE:

              “Welcome to the 2012 Corporate Citizenship Report. Our commitment – to our employees, shareholders and the communities and countries where we work –”

              IBM:
              “Corporate citizenship
              IBM has developed a thoughtful, comprehensive approach to corporate citizenship that we believe aligns with IBM’s values ”

              Johnson and Johnson
              “Our Corporate Citizenship
              We aim to make the world a better and healthier”

              MACWORLD
              “Business Ethics has named Apple as one of the top 100 “Best Corporate Citizens”

              (Macworld is also wrong using the word?)

              Chicago Tribune:
              “Certain responsibilities of “corporate citizenhood” were commonly spoken of in the past, ”

              (botty you know more about the use of the English language than the editors of the Tribune?)


              botty you must be BILLIONAIRE as you know more than all those multibillion dollar corps and all those magazines and newspapers…

            16. only because I have detected a modicum of sincerity in your tragically misinformed opinion, I am going to teach you this most valuable directive on critical thinking:

              “Reason is not automatic. Those who deny it cannot be conquered by it. Do not count on them. Leave them alone.”

            17. The same dilemma that Galileo found himself in when all the “authorities” denied reason. As was with Columbus, Jefferson, Lincoln, Gandhi, Welesa…your fallacious “appeal to authority” is as trite as a juvenile bewailing, “my friends all do it, it must be okay.”

            18. you were close to grasping difference between the two definitions when you noted “you can’t sue a Rock.” Like a rock, a corporation is an inanimate entity, it is incapable of reason or acting upon its own volition. However, a citizen can and does make choices. It would be acceptable to use the term “Citizen CEO” or “Citizen Janitor.” It is not acceptable, nor reasonable, nor logical to apply traits to an inanimate entity that it simply cannot have. Therefore, I stand by my original posit that stated, “corporations aren’t citizens, you nincompoop.”

            19. “you were close to grasping difference between the two definitions when you noted “you can’t sue a Rock.” Like a rock, a corporation is an inanimate entity,”

              lol you are defeating your own argument.

              you can’t sue a rock but you CAN sue a Corp because as I’ve stated before in several aspects legally a Corp is treated NOT as an inanimate object but as a person

              you still believe you’ve got your argument correct when I’ve quoted all those people: organizations, corps (Exxon, IBM, Oracle etc) , magazines, newspapers, websites using the term “corporate citizen’ and also quoted dictionary def. of it? surely all those corporate lawyers won’t allow the use of the term if it’s not acceptable?

              all those people are wrong using the term and botvinnik is right? wow…

  3. What happened to parental responsibility? Maybe these parents need to learn to monitor what the hell their kids are doing. To begin with, why does the kid have the password to the Apple Store?

  4. After all this time and knowing how the system works, I still cannot get my head around how people blame Apple for people allowing their kids to have access to the account passwords.

    1. Your kid brings over the iPad and asks you if they can download some neato (or educational) game. Its free, so you type in the access code, download it, and hand it back to the kid. What you don’t know is that you have opened a 15 minute window in which anything can be downloaded without the password. So, unless your kid is totally honest, you have to sit on the device until the window closes and then give it back.

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