Apple Devs Face Out-Of-Pocket Expenses Over Refund Policy?

iPhone and iPod touch developers distributing through the App Store may find themselves seriously out of pocket if return rates on their software climb too high, thanks to a refund clause in the Apple contract.  According to the clause, while Apple passes 70-percent of App Store revenue onto developers for sales, developers are liable for 100-percent of the cost should Apple have to refund a buyer.

"In the event that Apple receives any notice or claim from any end-user that: (i) the end-user wishes to cancel its license to any of the Licensed Applications within ninety (90) days of the date of download of that Licensed Application by that end-user; or (ii) a Licensed Application fails to conform to Your specifications or Your product warranty or the requirements of any applicable law, Apple may refund to the end-user the full amount of the price paid by the end-user for that Licensed Application. In the event that Apple refunds any such price to an end-user, You shall reimburse, or grant Apple a credit for, an amount equal to the price for that Licensed Application. Apple will have the right to retain its commission on the sale of that Licensed Application, notwithstanding the refund of the price to the end." iPhone developer clause

Anybody buying software through the App Store has ninety days to decide they want a refund, and Apple reserve the right to given them back all that they paid for the program.  If that happens, the contract developers must sign in order to distribute through the App Store commits them to paying Apple back "the price for that Licensed Application" with Apple retaining its commission.

If enough refunds were requested, developers could actually end up paying out more than they make.  There are mixed reports about whether this clause is new – some are claiming that it is the updated contract for iPhone OS 3.0 – or was in the original contract.