Apple is to pay out at least $32.5 million (€23.9 million) in refunds to consumers whose children made purchases without parental permission while using mobile apps, US regulators said Wednesday.
The Federal Trade Commission (FTC) said the tech giant will be required to make full refunds for any such in-app purchases upon request by its customers.
Apple has also been told to change its billing practices to make it more difficult for children to make in-app purchases accidentally or without parental permission.
The FTC said it had received tens of thousands of complaints from disgruntled Apple customers over unauthorised charges.
One parent told the commission that her daughter had spent $2,600 in the app “Tap Pet Hotel,” a game in which kids can build their own pet hotel.
The game is free to download and play but involves in-app purchases where kids buy treats and coins for their pets.
Others consumers reported unauthorised purchases by children totalling more than $500 in the apps “Dragon Story” and “Tiny Zoo Friends”.
FTC chairwoman Edith Ramirez said Apple failed to inform parents that by entering a password for a one-off app purchase they were activating a 15-minute where unlimited additional purchases could be made by their children, ranging from one dollar to $100 a time.
Ramirez told reporters that because of the loophole, “children ran up millions of dollars in charges without their parents’ knowledge and consent”, a violation of federal rules.
The $32.5 million payout is the minimum Apple must make and the figure could rise higher depending on the number and size of demands for refunds.
In a leaked memo to employees, Apple chief executive Tim Cook said the company has already been following the practices requested by the US regulator.
“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 was quoted as saying in the memo obtained and posted online by the website 9to5mac.
Cook said Apple had “heard from some customers with children that it was too easy to make in-app purchases, so we moved quickly to make improvements.”
He said the company sent emails to 28 million App Store customers offering refunds and that “when some emails bounced, we mailed the parents postcards”.