Smurfberry scandal costs Apple $32.5 million

Apple had already agreed to settle a class action suit over children making in-app purchases without parental consent. Now it’s agreed to pay at least $32.5 million to settle a government action.

The case again involves the way Apple changed its app store policies such that once you enter your password you (or more concerningly your children) can make in-app purchases during the next 15 minutes without having to type in the details again.

It took 45 days after this change before Apple put in the option to block this 15 minute window. That left plenty of opportunity for kids to make purchases as pricey as $99.99 for a virtual wagon of Smurfberries in Smurf’s Village.

Last February Apple settled a class action suit by agreeing to refund any in-app purchases made during this specific 45-day period. Claimants could either get a flat $5 or submit a full list of relevant purchases (complete with a legal statement that a child made the purchases without permission) and get a full refund. Later Apple revised this to cover any 45-day period of the claimant’s choice.

The Federal Trade Commission issued a separate complaint. It argued that Apple breached trading laws by failing to inform users that typing in their password not only made a purchase but also opened up the 15 minute window. It also said that some apps aimed at children asked a parent for a password without making clear that this was to authorize a purchase.

The FTC and Apple have now settled that complaint and Apple has agreed to issue refunds where relevant, though users will need to actively make a request. It’s much the same process as the class action suit, though it does mean a fresh opportunity to claim for anyone who didn’t do so before and (unless they specifically opted out of the class action settlement) lost their right to pursue their own court case against Apple.

Apple will have to pay all requested refunds, whatever the total. If that total doesn’t reach $32.5 million, Apple will pay the difference directly to the FTC as a fine.

Internal Apple e-mails from CEO Tim Cook say the company was unhappy at being pursued by the FTC over a matter it had already settled in court. However, Cook concluded that the likely FTC punishment wasn’t severe enough to make it worth getting involved in a further legal battle.

The precise details of the FTC-ordered refunds have yet to be formally confirmed. It appears that any payment people have already received through the class action case will be deducted from the new payout. However, the standard of proof required to claim through the FTC settlement will be lower and some people may get money above and beyond what they’ve already received.

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