Apple Waves the White Flag

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Apple (NASDAQ:AAPL) has decided to settle a class-action lawsuit that claimed the company’s in-app purchase policy did not do enough to prevent children from using their parents’ accounts.

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While the deal has yet to be finalized, Apple agreed to pay each class member with a $5 iTunes gift card, account credit, or a cash payment for claims over $30. With Apple prepared to send email notices to “over 23 million iTunes account holders who made a Game Currency purchase in one or more Qualified Apps,” the company may possibly end up paying a total of around $100 million.

The proposed settlement, which requires court approval, is scheduled to be heard on March 1.

The lawsuit was originally filed in 2011 by five parents whose children inadvertently downloaded apps, Reuters said. The plaintiffs said purchases were made without the knowledge or permission of the account holder. Some children bought as much as $99 to more than $300 worth of in-game content.

According to court filings, the suit said, “Apple failed to adequately disclose that third-party Game Apps, largely available for free and rated as containing content suitable for children, contained the ability to make In-App Purchases.”

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The main point of contention is freemium apps, which can be downloaded for free but come with in-app upgrades that can be priced as high as $100. Apple has since changed its in-app purchase policy and added immediate requirement of iTunes account passwords.

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