Apple Offers Refunds, iTunes Credit to Settle In-App Payment Suit

Apple has reached a deal with customers who sued Cupertino in 2011 for the "unlawful exploitation" of children (and their parents' wallets) via in-app purchases.

As part of the arrangement, Apple will refund customers whose children inadvertantly ran up bills via in-app purchases, and offer a $5 iTunes credit for their troubles.

A California judge will consider the deal at a March 1 hearing.

The case started in April 2011 when Pennsylvania resident Garen Meguerian sued Apple after his 9-year-old daughter racked up about $200 in in-app purchases while playing games like Zombie Café, Treasure Story, and City Story. Meguerian said he was "completely unaware" that these games included in-game currency and was shocked to find the charges on his account.

The purchases were made in Feb. 2011, before Apple started requiring a password for in-app purchases via the iOS 4.3 ugrade in March.

Four other people filed similar lawsuits around the same time; those suits were consolidated into one case in June 2011. Early on, Apple tried unsucessfully to have the case tossed and to prevent the release of evidence. Ultimately, the two sides were ordered into mediation; they met on Oct. 23, 2012 and Jan. 17, 2013 and eventually reached a deal.

Apple has agreed to refund the price of in-app purchases made by minors during an unspecified 45-day period. Class members will also be entitled to a $5 iTunes store credit; they must attest that their children purchased the app content without their knowledge or permission. Those who racked up more than $30 in charges can request a cash payment rather than the iTunes credit.

It's not yet known how many people will take advantage of the settlement; court filings said Apple will notify 23 million iTunes account holders who have made in-app purchases.

Apple's in-app purchase policies got attention in 2011 when lawmakers asked the Federal Trade Commission to examine in-app purchases and determine whether or not consumers were being unfairly charged. They pointed to a Washington Post article that discussed an 8-year-old who had racked up $1,400 in in-app charges via Capcom's Smurfs' Village game. Capcom later agreed to post a warning about in-app purchases.