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Apple agrees to refund app store purchases totaling $32.5 million

Jan 15 2014, 9:20pm CST | by , in News | Apple

Apple agrees to refund app store purchases totaling $32.5 million
Getty Images

Instead of fighting what could be a long and tiresome legal battle against the Federal Trade Commission, Apple raised the white flag and agreed to refund unauthorized app purchases.

Parents will be happy to hear that Apple has just agreed to refund app store purchases that were made without their consent.

The Federal Trade Commission previously filed a complaint against the company for charging millions of dollars to its customers through so-called "bait apps." These apps were free to download, but incurred in-app purchases.

Experts have a name for the elusive strategy: freemium. The free-meets-premium model, according to app analytics company Flurry, is now generating more money than paid apps.

Furthermore, Apple also complied to an FTC mandate requiring the company to change its billing practices and ensure that customers are clearly informed before being charged for their purchases. Apple will pay a minimum of $32.5 million to settle the case and has a March 31 deadline.

FTC Chairwoman Edith Ramirez said that companies cannot charge consumers for purchases they did not authorize.

"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," she added.

Last year, Apple settled a class-action lawsuit for unauthorized app purchases. The company offered a $5 iTunes credit/ cash for unauthorized purchases more than $30.

In a letter sent to Apple employees today on Wednesday, Apple CEO Tim Cook said that it is a double jeopardy, adding that it didn't feel right for the FTC to sue over a case that had already been settled.

"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," he added.

Apple has received 37,000 claims from parents all in all. "We will be reimbursing each one as promised," Apple said. 

 

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