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FTC to Apple (and Mobile Community): Be Transparent

  |  January 15, 2014   |  Comments

Apple reached a settlement with the FTC today over a loophole that has allowed children to purchase unlimited virtual items in the Apple Store without parents' permission. The company will refund a minimum of $32.5 million to its consumers.

In what can be perceived as an underlying warning from the Federal Trade Commission (FTC) to all companies working within the mobile field today: be transparent with your consumers, or there'll be (rather large) consequences. 

Earlier today, Apple reached a settlement with the FTC over a loophole that has allowed children to purchase unlimited virtual items in the Apple Store without parents' permission.

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Under the terms of the settlement, Apple is required to change its billing practices in order to ensure that "it has obtained express, informed consent from consumers before charging them for items sold in mobile apps." The tech giant will refund a minimum of $32.5 million to its consumers.

Apple devices spare users to enter their passwords twice within 15 minutes to buy mobile apps and other virtual items in Apple Store. Most parents are not aware that this 15-minute window would allow their children to make unlimited purchases from within apps or mobile games without their consent. Unauthorized charges in the Apple Store generally range from 99 cents to $99.99 per in-app charge, according to the FTC.

"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.

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ABOUT THE AUTHOR

Yuyu Chen

Yuyu Chen is a junior reporter at ClickZ. Her work has appeared in Local East Village, New York Daily News and Brooklyn Chamber of Commerce website. Yuyu received her M.A. in Business and Economic Reporting from New York University in May, 2013.

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