Apple to pay out over iPhone water damage indicator dispute

If your iPhone or iPod Touch warranty proved useless after supposed water damage, you could be in line for a cash payment thanks to a proposed Apple court settlement.

The settlement comes in a class action case involving Apple’s use of an internal indicator to show that liquid had got into the device. At that time, Apple’s warranty for the devices said that the indicator was sufficient proof of liquid damage to allow it to void warranties.

The indicator was a piece of tape made by 3M that would change from white to pink or red when it got wet. It was installed in such a way that Apple staff could check the color without needing to open up the device. There’s a suggestion staff would habitually check the indicator before processing any claim, whether or not it involved liquid, and reject the claim if the indicator had been triggered.

Four people who had warranty claims rejected brought a class action case arguing that the indicator wasn’t proof that liquid had caused any damage to a device, let alone the specific problem that prompted the claim. They also cited 3M testing and documents that say the tape could indicate humidity rather than direct exposure to liquids.

Apple has now filed a proposed final settlement for the case. Although it hasn’t been published, it appears to be largely similar to a preliminary filing leaked to Wired (PDF) last month.

The proposal is for Apple to pay a flat sum of $53 million into the court, of which around a third will be earmarked for lawyers. Anyone making a valid claim will get a fixed amount depending on their device model and storage capacity, ranging from $160 to $300. Whatever’s left will go to consumer groups and non-profit organizations.

The class in this case is anyone who had a claim rejected over the liquids issue for an iPhone up to December 2009 or an iPod Touch up to June 2010.

Lawyers say they believe 153,000 people could come into the class. Of these they have contact information for around 130,000 and will automatically send a check unless people actively opt out of the settlement. Those who do receive a payment under the settlement will lose the right to take any independent action against Apple. The proposed settlement, which needs to be approved by the court, doesn’t involve Apple admitting any liability and thus can’t be used as evidence in an independent case.