At issue are "in-app purchases" – subscriptions or recurring services, or in the case of video games, bonus levels and items that might not be available to the non-paying users. The FTC had previously charged that Apple did not adequately inform users that there is a 15-minute window after password entry in "which children using the app can incur charges without further action by the account holder."
In other words, a parent might give his or her child an iPad game to play with, only to come back and realize young Tommy has spent $38 bucks for a new costume for his in-game avatar.
In settling the FTC complaint, Apple will refund consumers affected by the practices at least $32.5 million. It will also change its practices: The FTC says the Cupertino company must from now on obtain "express, informed consent from consumers before charging them for items sold in mobile apps." How exactly that consent will be obtained is unclear, but expect some sort of window to pop up when the app is purchased.
"This settlement is a victory for consumers harmed by Apple’s unfair billing, and a signal to the business community: whether you’re doing business in the mobile arena or the mall down the street, fundamental consumer protections apply," FTC Chairwoman Edith Ramirez said in a statement yesterday. "You cannot charge consumers for purchases they did not authorize."
Of course, $32.5 million isn't exactly going bankrupt Apple, a company that has seen a widening revenue stream from its App Store. In 2013, users spent a reported $10 billion on App Store software; in December alone, billing topped $1 billion. (App developers, meanwhile, have made $15 billion since the App Store launched.)
Apple has called 2013 the best-ever year for the App Store.