Apple settles with FTC on in-app purchases; Tim Cook sounds off

Jan 15, 2014
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This morning Apple CEO Tim Cook has sent out a letter to his employees about their talks with the U.S. Federal Trade Commission over App Store in-app purchases. You'll find that Apple's chats with the FTC over the past few months have not been in vain, and have resulted in a negotiation ending in a consent decree. Cook suggests that "I know this announcement will come as a surprise to many of you since Apple has led the industry by making the App Store a safe place for customers of all ages."

Working with in-app purchases since all the way back in 2009, Apple has found itself in a little bit of hot water with users suggesting it's too easy for "younger customers" to make purchases without their parents' consent. It was in the 15-minute window after an app was purchased initially that allowed underage users to make purchases in the App Store and/or in-app without entering a new password - as Apple built-in for user ease - that the company was speaking about.

Meanwhile the 2009 introduction of in-app purchases included an on-off switch for parents to do away with the ability altogether. Cook made note in his letter this week that Apple's efforts to make good with parents that felt their kids' purchases were too easy included not only emails, but postcards as well, informing them of refunds coming their way.

The FTC did not feel that this was enough of an effort, needless to say. Today's announcement from the FTC reads as follows, in part.

"Apple Inc. has agreed to provide full refunds to consumers, paying a minimum of $32.5 million, to settle a Federal Trade Commission complaint that the company billed consumers for millions of dollars of charges incurred by children in kids’ mobile apps without their parents’ consent.

Under the terms of the settlement with the FTC, Apple also will be required to change its billing practices to ensure that it has obtained express, informed consent from consumers before charging them for items sold in mobile apps." - U.S. Federal Trade Commission

At this point in the process, Cook notes that a federal judge agreed with Apple's actions and called it a full settlement. Though Apple felt that this was the end of this issue altogether, the FTC opened a new lawsuit - as you'll see in the FTC announcement segment above.

"It doesn’t feel right for the FTC to sue over a case that had already been settled. To us, it smacked of double jeopardy. 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." - Tim Cook

Cook ends his letter with assurances that Apple is the company it's always been, and that they're certainly not backing down from the future in the process of this in-app purchase disruption, so to speak. "As Apple continues to grow, there will inevitably be scrutiny and criticism along our journey," said Cook, "We don’t shy away from these kinds of questions, because we are confident in the integrity of our company and our coworkers."

Meanwhile FTC Chairwoman Edith Ramirez had a different angle to offer in the FTC's release of this information.

"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. You cannot charge consumers for purchases they did not authorize.” - FTC Chairwoman Edith Ramirez

With a payment total coming up minimum $32.5 million, Apple is still going to be just fine. Until you, the in-app purchase user with wily child receives their cash, it's all about keeping your child's hand off the "buy" trigger.

VIA: 9to5Mac, Federal Trade Commission


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