Apple to refund $36m in disputed app purchases

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Apple to refund $36m in disputed app purchases

All apps to get new disclosures.

Apple will refund consumers at least US$32.5 million (A$36.4 million) to settle a longstanding complaint that the company billed US consumers for charges incurred by children through mobile apps without their parents' consent.

Under the terms of the settlement, announced by the US 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.

"Whether you're doing business in the mobile arena or the mall down the street, fundamental consumer protections apply," said FTC Chairwoman Edith Ramirez. "You cannot charge consumers for purchases they did not authorise."

She estimated that children spent millions of dollars without their parents' knowledge, and said the commission had received "tens of thousands of complaints" from consumers over the unauthorised purchases.

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 US$100 million to parents whose children made unauthorised 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.

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 finalised.

"To be clear, the issue is not that Apple opens a 15-minute window for in-app purchases," Ramirez said. "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."

Apple shares showed little response to the news and in mid-afternoon trading were up 2.1 percent at US$558.03, holding onto gains posted earlier.

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