Apple refunding $36m in kids' App Store debt

After one too many parents complained about their children making expensive in-app purchases, Apple has announced it will refund at least $36 million to U.S. customers. The hardware giant will also change the way the App Store works, hopefully preventing kids from racking up huge bills in future.

While many bills – like this £980 of virtual donuts, and £4k of Smurfberries – have been accumulated through users setting their devices to “always remember” App Store passwords, a significant number of parents have attempted to do the right thing, requiring authentication for each purchase. However, Apple has admitted to a loophole in the software, which kids had inadvertently been exploiting.

Angry Birds Go!

Angry Birds Go! asks for $100 in in-app purchases

Until now, iPhone and iPad users have been able to make in-app purchases for up to 15 minutes after a password had been entered, providing just enough time for children to spend real-world money on in-game items. Those $0.99 purchases add up quickly, but many games are priced far higher – Angry Birds Go has a car for $100.

If you didn’t know about that time-out feature, you’re not alone. The U.S. Federal Trade Commission (FTC) says that Apple neglected to inform users of the 15-minute window. Chairwoman Edith Ramirez explained in a new finding that children ran up “millions of dollars in charges without their parents’ knowledge and consent” – and this, understandably, is a violation of U.S. federal rules.

Apple has agreed to a minimum payout of $US32.5 million, with no maximum set. The 15-minute time out will not be closed, but must be made clear to all users, including parents.

Tim Cook, chief executive at Apple, says that the company had no reason to fight with the regulator. He explains Apple had already started making improvements to the App Store, after hearing from customers with children that it was “too easy” to make in-app purchases.

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.

Cook says his company sent out 28 million emails to App Store customers, offering refunds. If the emails bounced, the customers were sent postcards, to ensure everybody got the message. 37,000 claims were received and will be reimbursed.

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