FTC Puts Apple in Time Out for Letting Kids Buy Apps
Apple (NASDAQ:AAPL) has agreed to a $35.2 million settlement the Federal Trade Commission over a loophole in its App Store that allowed children to make purchases within the store without their parents’ consent. That $35.2 million will go to refunding the parents of app-hungry kids who made purchases in Apple’s App Store without the parents’ knowledge. Apple had originally set up its App Store so that purchases could be made within 15 minutes of someone entering their user name and password to make it more convenient for people to make multiple purchases. The problem arose when kids figured this out and ran up huge charges on their parents’ iTunes accounts for apps, games, and other digital purchases.
Apple also has to change its billing policies to make sure the company has “express, informed consent from consumers before charging them for items sold in mobile apps,” the FTC said in a statement seen by CNBC. “This settlement is a victory for consumers harmed by Apple’s unfair billing, and a signal to the business community: whether you’re doing business in the mobile arena or the mall down the street, fundamental consumer protections apply,” said FTC Chairwoman Edith Ramirez, in the statement, per CNBC. “You cannot charge consumers for purchases they did not authorize.”
Apple CEO Tim Cook isn’t so happy about the ruling, though, as he believes the company has already taken care of the loophole that allowed for the accidental purchases and refunded consumers some $32 million.