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Out-Law News 1 min. read

Apple and US parents propose settlement over 'in-app purchases' by children


A US district court in California will decide on Friday whether to approve a draft settlement negotiated between Apple and five US parents in a legal case regarding "in-app purchases" by children.

Apple and the five parents have agreed what they believe to be a "fair, adequate and reasonable" settlement, according to court papers.

The settlement would, if approved, require the software giant to provide full refunds to US adults whose children bought "game currency", defined as "virtual supplies, content or currency", when using third-party applications downloaded from Apple's iTunes app store "without the knowledge or permission of the account holder".

The period during which Apple would be liable to pay the refunds under the proposed settlement would be 45 days for each individual affected in the class action, although individuals would be able to make a case to be further compensated for additional in-app charges that were incurred outside of the 45 day window.

Those eligible to claim could, under the proposed settlement, obtain $5 credit to use in Apple's iTunes store in what would amount to a "simplified claims process" since a "significant majority" of those people incurred charges valuing at less than $5, the court papers said.

Apple would be obliged to publicise the terms of the settlement to individuals who have purchased game currency from third-party apps downloaded from the app store.

"The proposed settlement eliminates the risks of continued litigation, including the risk of no recovery from Apple," the proposed settlement document said. "It immediately provides the certainty of valuable benefits to the Class Members. Most importantly, the proposed settlement provides a recovery to every iTunes account holder who paid for a Qualified Game Currency Charge, if the charge was made without the account holder’s knowledge or consent."

Apple has already "implemented additional passwords and parental controls" in its operating system which mean that individuals would "best be served by a settlement that ensures full recovery of past Qualified Game Currency Charges", it said.

"If this case is not settled, it would be necessary to continue prosecuting the litigation against Apple through class certification, trial, and appeal," the papers said. "Thus, any potential benefits to the class would likely be delayed for years if the case proceeds in litigation."

If the settlement is approved, Apple could have to inform as many as 23 million US citizens about their potential eligibility to claim compensation and could face a $100m bill as a result, according to reports by the BBC.

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