Apple settles $100 million suit over kids' in-app purchases

Posted By Kristen Butler,  |  Feb. 26, 2013 at 11:15 AM
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$100 million may sound like a lot of money, but the potentially millions of accounts charged by kids' apps without their knowledge are only eligible for $5 each — as an iTunes gift card.

Apple has always required users to enter their passwords when they download an app, but the company used to also allow them to make additional in-app purchases for 15 minutes without reentering a password.

Parents complained that children were able to accumulate hundreds of dollars in charges during that small window, drawing the scrutiny of state and federal regulators. The suit highlights children who spent between $99 and $300 on in-app purchases.

The issue gained considerable traction in 2010 with the popular kids' app Tap Fish, in which children care for a tank of fish. The app was free to download, but once the first fish went belly-up, the app let kids charge their parents' credit card for more fish, in at least one case to the tune of $1200.

In March 2011 Apple began requiring a password for purchases, even on recently downloaded apps.

Under the terms of the new settlement, Apple will send notices to more than 23 million iTunes accounts that made in-app purchases, but the size of the class is still unclear. To qualify, Apple customers have to prove that they were charged for in-app purchases made by a minor, had not given their account password to the child and have not already been refunded the charges.

Users who spent more than $30 on in-app purchases can opt to get the $5 payment in cash rather than iTunes credit, but will have to file paperwork detailing which apps they used to accumulate those charges.

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