Apple Agrees to FTC Terms Over In-App Purchases With $32 Million Settlement

[BaldiMac]

"The system default is designed for the majority of the users, not for a specific minority subset."

Maybe you can answer my question. Stating how many CLAIMS Apple has is no indication of how many children (under 18) or parents own iOS devices that would determine majority/minority "settings" defaults.

I have no idea what larger point is being made here, but there were 28 million accounts that made an IAP in a game designed for kids. Even assuming every single one of them involved an unauthorized purchase by a minor, we are still talking about a minority.

(About 90 million iPhones, 50 million iPod touch, and 15 million iPads had been sold at the time.)

Hope that helps!

 

[IJ Reilly]

37,000 who filed a claim after Apple contacted over 28 million who might have been affected.



Probably just a number that you made up.



Absolutely, it's an issue that Apple acknowledged and dealt with. They updated IAP to require a password within the 15 minute window and agreed to refund parents who were affected by the issue. Before the FTC got involved.

Actually, 23 million. That is the number of account holders who "might" have been affected. Presumably this is the number of account holders who Apple knows from their records made in-app purchases.

Using a bit of common sense, it seems reasonable to assume that at least one percent of these 23 million account holders have children who made purchases that their parents did not explicitly approve. I'm sure you will explain how that logic is faulty.

Apple requires that account holders prove that their children made unauthorized purchases along with their claim filing. Very few people who are in an eligible class actually bother filing class action claims. Unless it's serious money, providing the required proof isn't worth the time and effort.

The FTC is taking a step or two further than the original settlement. And they are not just looking at Apple.

 

[samcraig]

I have no idea what larger point is being made here, but there were 28 million accounts that made an IAP in a game designed for kids. Even assuming every single one of them involved an unauthorized purchase by a minor, we are still talking about a minority.

(About 90 million iPhones, 50 million iPod touch, and 15 million iPads had been sold at the time.)

Hope that helps!

No - it doesn't help. The point he was trying to make was that setting IAP to default to off would be targeting a minority of iPhone users. Because parents and children do not make up the majority of iOS users. I asked for a stat. Not how many apps, claims or accounts used IAP. But how he can quantify his statement that such a setting would only appeal or only target a minority.

 

[BaldiMac]

Unanticipated by whom? Isn't it possible Apple was well aware of the ramifications and chose to not do anything about it. I'm not saying Apple is evil by any sense. But I'm not sure you can quantify that it was unanticipated by Apple.

Sure. It's possible. It just isn't very likely.

Actually, 23 million. That is the number of account holders who "might" have been affected. Presumably this is the number of account holders who Apple knows from their records made in-app purchases.

I'm just going by the letter in the OP. The difference doesn't matter, of course.

Using a bit of common sense, it seems reasonable to assume that at least one percent of these 23 million account holders have children who made purchases that their parents did not explicitly approve. I'm sure you will explain how that logic is faulty.

You could very well be right. It's a reasonable number. There is just no basis for it.

Apple requires that account holders prove that their children made unauthorized purchases along with their claim filing. Very few people who are in an eligible class actually bother filing class action claims. Unless it's serious money, providing the required proof isn't worth the time and effort.

Exactly.

The FTC is taking a step or two further than the original settlement. And they are not just looking at Apple.

They made it a bit easier to qualify. And claimed any leftovers for themselves, of course.

No - it doesn't help. The point he was trying to make was that setting IAP to default to off would be targeting a minority of iPhone users. Because parents and children do not make up the majority of iOS users. I asked for a stat. Not how many apps, claims or accounts used IAP. But how he can quantify his statement that such a setting would only appeal or only target a minority.

I think it is clear that his point was that the number of people that were affected by the IAP issue in this settlement was a minority of iOS users. But you are free to infer otherwise.

 

[samcraig]

I think it is clear that his point was that the number of people that were affected by the IAP issue in this settlement was a minority of iOS users. But you are free to infer otherwise.

I will because we were talking about settings and whether or not it would affect the majority or minority of users to have it set one way vs the other. You can infer otherwise.

 

[kaltsasa]

Oh, I thought you were talking about Apple, you know, the company who will go out of their way to make EVERY attempt at determining where, when and how I am going to be using the device. Sorry, my bad.

I guess Apple is damned if they do and damned if they don't.

 

[cocky jeremy]

So let me ask you - why does Apple curate their store to avoid malicious apps (well they do the best they can) and/or porn and/or ones that don't adhere to API rules.

After all - you should know what you're downloading at all times and you're responsible for you device, right? Why is it Apple's fault that you downloaded an app and used it.

/end sarcasm

Apple's responsible because they had a 15 minute window where it was a free-for-all. And it was set as a default.

Now you might know where every single setting is and how to use it - but can you really say that the majority of people (given that the iPhone has no user manual that comes with device - and one would need to actively search for this setting) would know how to do it out of the box?

By clear definition of the word - some parents were ignorant to this happening. That's very different from being stupid, neglectful, and other words being stated in this thread.

If you purposely aren't learning important aspects of a device you're giving a kid, you ARE neglectful. Apple avoids porn/malicious apps more for PR than anything, especially porn.

 

[samcraig]

Sure. It's possible. It just isn't very likely.

According to who? You?

If you purposely aren't learning important aspects of a device you're giving a kid, you ARE neglectful. Apple avoids porn/malicious apps more for PR than anything, especially porn.

The problem with your assertion is the word purposely. If you don't know there are parental controls - you wouldn't necc think to go searching for them. They aren't exactly at a top level menu, now are they?

Further - if you didn't know about the 15 minute window (is that documented somewhere easily found to new users) - how would you think to ask.

Again - ignorance isn't the same as being stupid or neglectful.

So I disagree with you. Pretty much completely.

 

[BaldiMac]

According to who? You?

I'd love to hear your argument as to why it was likely.

 

[samcraig]

I'd love to hear your argument as to why it was likely.

I'm not arguing that it was likely. Where did I say it was likely or not likely. I'm just curious where you think you can quantify it either way. Isn't safer to say we simply don't know?

 

[IJ Reilly]

You could very well be right. It's a reasonable number. There is just no basis for it.

Reasonability is a basis. Except around here, I suppose.

It's more reasonable that saying that only 37,000 people out of billions of transactions are involved.

 

[tongxinshe]

The right thing to do here would've been for Apple to refund the money. No harm, no foul.

No harm? The people who made the purchase already enjoyed the happiness, service, convenience, etc. but now Apple is paying for those services, no harm? The 70% cut Apple paid to the developer isn’t refunded to Apple. The network usage cost Apple paid to Akamai isn’t refunded to Apple. The 2% credit card processing fee isn’t refunded from Visa/Matercard to Apple. The labor cost of the Apple employees who processed all of the data cannot be recovered. And that’s your standard of “no harm”?

 

[Renzatic]

No harm? The people who made the purchase already enjoyed the happiness, service, convenience, etc. but now Apple is paying for those services, no harm? The 70% cut Apple paid to the developer isn’t refunded to Apple. The network usage cost Apple paid to Akamai isn’t refunded to Apple. The 2% credit card processing fee isn’t refunded from Visa/Matercard to Apple. The labor cost of the Apple employees who processed all of the data cannot be recovered. And that’s your standard of “no harm”?

Have you ever heard the phrase "cost of doing business" Tong? That's exactly what this is.

 

[BaldiMac]

I'm not arguing that it was likely. Where did I say it was likely or not likely.

You questioned the my claim that it was unlikely. I just figured you might have a reason for that.

I'm just curious where you think you can quantify it either way. Isn't safer to say we simply don't know?

I don't have any problems with my claim. But, I'm not cynical.

Reasonability is a basis. Except around here, I suppose.

Fair enough. I agree with those sentiments immensely. I was just trying to use the actual numbers from the statement.

It's more reasonable that saying that only 37,000 people out of billions of transactions are involved.

Either way is a fraction of a percent.

I guess another way to look at it is in terms of revenue. $32 million in estimated unauthorized purchases vs around $3 billion in App Store revenue by the time they closed the loophole. Around 1%.

 

[IJ Reilly]

Either way is a fraction of a percent.

I guess another way to look at it is in terms of revenue. $32 million in estimated unauthorized purchases vs around $3 billion in App Store revenue by the time they closed the loophole. Around 1%.

Granted, but even a fraction of a very large number is still a very large number. I don't know how they arrived at the $32M figure. Presumably it is based on the claimants in the class action suit.

Anyway, this issue received an awful lot of play in the media, more than you might expect given that not a lot of people or money are involved in the scheme of things for Apple. Tim Cook agreeing only grudgingly to the FTC's terms only whetted the media's appetite. Just plain bad atmospherics all around. These are the times when the CEO should keep his head down and have the PR department deal handle it with some bland press release.

 

[gnasher729]

Granted, but even a fraction of a very large number is still a very large number. I don't know how they arrived at the $32M figure. Presumably it is based on the claimants in the class action suit.

Anyway, this issue received an awful lot of play in the media, more than you might expect given that not a lot of people or money are involved in the scheme of things for Apple. Tim Cook agreeing only grudgingly to the FTC's terms only whetted the media's appetite. Just plain bad atmospherics all around. These are the times when the CEO should keep his head down and have the PR department deal handle it with some bland press release.

Apple had already settled the whole thing a year ago, and then the FTC came with exactly the same claims. So Apple has already long ago sent out notifications to everyone who could have been affected, including sending postcards to anyone who couldn't be reached by email. Tim Cook only agreed grudgingly because he thought the whole situation had been sorted out a year ago, and didn't like it that a second government agency comes up with exactly the same claim.

The difference between what the FTC wants and the previous settlement: 1. The FTC doesn't want a limit of $32 million, like the previous settlement. But I haven't heard anyone complaining that Apple didn't pay out because that limit was reached, so apparently they never reached the $32 million limit, so this point is moot. And the FTC required Apple to change their behaviour, which they obviously did long ago to avoid another settlement, so this is also moot.

----------

No harm? The people who made the purchase already enjoyed the happiness, service, convenience, etc. but now Apple is paying for those services, no harm? The 70% cut Apple paid to the developer isn’t refunded to Apple. The network usage cost Apple paid to Akamai isn’t refunded to Apple. The 2% credit card processing fee isn’t refunded from Visa/Matercard to Apple. The labor cost of the Apple employees who processed all of the data cannot be recovered. And that’s your standard of “no harm”?

Doesn't work that way. If Apple refunds money to you, then the developer will refund money to Apple. That's in their contract. And as others said correctly, that's the cost of business. Of course there are always idiots who think that Apple takes 30% of each purchase and just puts it into their pockets. This money comes out of that 30%. That's what the 30% are there for.

 

[IJ Reilly]

Apple had already settled the whole thing a year ago, and then the FTC came with exactly the same claims. So Apple has already long ago sent out notifications to everyone who could have been affected, including sending postcards to anyone who couldn't be reached by email. Tim Cook only agreed grudgingly because he thought the whole situation had been sorted out a year ago, and didn't like it that a second government agency comes up with exactly the same claim.

The difference between what the FTC wants and the previous settlement: 1. The FTC doesn't want a limit of $32 million, like the previous settlement. But I haven't heard anyone complaining that Apple didn't pay out because that limit was reached, so apparently they never reached the $32 million limit, so this point is moot. And the FTC required Apple to change their behaviour, which they obviously did long ago to avoid another settlement, so this is also moot.

I don't believe a government agency was involved with the prior settlement, unless you call the courts a government agency. The FTC says that other issues are involved beyond the initial settlement, and more importantly I believe, that other companies are also going to be held in account for similar issues. Read as Google. If they went (or go) after Google without holding Apple to the same standard, would that not be grounds for Google to complain bitterly?

It's the grudging public agreement that I find so mystifying and pointless. If you're going to do it, just smile, and do it. Don't do it and tell us how unhappy it makes you. I've had this personal experience -- companies responding to a service complaint with "we'll take care of it, but not because we think we should." It's just plain bad form.

 

[Tech198]

that's a lotta loot...

I know Apple only cares about customers, but seriously, paying BACK all that ?

However, Apple cares enough to put parental control in iOS to begin with, this basically says "Why did we care about parental control ??"

I would have just kept the money...... Apple's term and conditions are supposed to be final...

This doesn't look very final to me if Apple returns money because of *mistakes people make* regardless of age. The tools are part of iOS, but people don't use them, them blame Apple over THEIR oversight...

uh uh....... maybe i should do this too.... maybe i can get my $300 + back for all those apps i bought for iOS. And Apple must do this because they care too much for their customers as a "We're number #1 in service".... At least other companies play by the rule book.. Apple breaks theirs when they feel like it.

 

[rellimie]

Apple has parental restrictions for preventing IAP. Tuen them on. To me they have already done enough.

 

[haruhiko]

The question I have is why Apple lets them on the App Store given the trouble they cause, especially the ones aimed at young children.

There was once a rule in the App Store, "free games always stay free" and Apple did not allow in-app purchase in free games. However, this restriction was cancelled later for unknown reasons.

 

[haruhiko]

that's a lotta loot...

I know Apple only cares about customers, but seriously, paying BACK all that ?

However, Apple cares enough to put parental control in iOS to begin with, this basically says "Why did we care about parental control ??"

I would have just kept the money...... Apple's term and conditions are supposed to be final...

This doesn't look very final to me if Apple returns money because of *mistakes people make* regardless of age. The tools are part of iOS, but people don't use them, them blame Apple over THEIR oversight...

uh uh....... maybe i should do this too.... maybe i can get my $300 + back for all those apps i bought for iOS. And Apple must do this because they care too much for their customers as a "We're number #1 in service".... At least other companies play by the rule book.. Apple breaks theirs when they feel like it.

Google "contract with minors"