Apple (NASDAQ:AAPL) is about to dip into its coffers to settle a Federal Trade Commission complaint. The tech giant will pay a minimum of $32.5 million in full customer refunds to retire the complaint, which accused the company of billing customers for in-app purchases made by children without their parents' consent.
Apple will also modify its billing practices to ensure that "express, informed consent" is given by its customers for such purchases, according to information released today by the FTC.
In-app purchases are extra features, functions, or virtual currency within an app that are offered after a user initially downloads the title. Numerous apps intended for children feature them.
In its press release announcing the news, the FTC quoted its chairwoman, Edith Ramirez, as saying that the agreement "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."
According to the FTC, Apple has received tens of thousands of complaints about unauthorized in-app buying by children. One particularly egregious example alleged that a child spent $2,600 on such buys in the Tap Pet Hotel app.
Under the terms of the settlement, Apple is required to provide full refunds promptly, upon request from the affected account holders. Apple is required to notify all consumers charged for in-app charges of the availability of refunds and how to get them for unauthorized purchases by children. If Apple issues less than $32.5 million in refunds in the year after the settlement becomes final, it will have to pay the balance to the FTC.
A message left for an Apple spokesperson was not immediately returned.
Fool contributor Eric Volkman has no position in Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.