Apple reimburses parents whose children made in-app purchases

By Russ Van Arsdale, Executive Director Northeast CONTACT
Posted July 07, 2013, at 1:08 p.m.

As consumer advocates, we were glad to see the news last week that Apple had set aside $100 million to reimburse parents for things their children bought online.

Consider the 8-year-old from Michigan who made 15 purchases totaling $720 to “enhance” the “free” game he was playing. The next day he charged more than $420. Total time for the two spending sprees: under 90 minutes.

Many similar purchases were made without parents’ knowledge or consent. When a number of them complained, the Federal Trade Commission stepped in. Now, parents whose children made at least $30 in “in-app purchases” can get a $5 iTunes store credit. Those who claim outlays more than $30 will need receipts to verify their claims. Claims can be filed online at the settlement website, itunesinapppurchasesettlement.com.

The FTC took action because, in the words of then-chairman Jon Leibowitz, “Consumers, particularly children, are unlikely to understand the ramifications of these types of purchases.”

Another business practice that targets children is also in the news, and this one has potentially much more serious implications.

It also involves the FTC, which in May sent letters reminding more than 90 businesses of the July 1 deadline to comply with the Children’s Online Privacy Protection Act, or COPPA. The FTC had the law under review for two years and resisted pressure to ease requirements on businesses aimed at protecting the personally identifiable information of children under age 13.

Some websites and phone apps have been collecting children’s photos and geo-locations. Under the new rules, from now on they’ll have to get parents’ permission to do so. Companies also are forbidden to use digital identifiers, including cookies, to track young users and to tailor ads to their patterns of use. There are also new rules about the use of third-party collectors of information.

The FTC letters advised companies that they must treat children’s photos and geo-locations the same as email and home addresses. Companies may use email to notify parents of the changes. Parents should try to prevent their young ones from using fake email addresses to grant themselves permission that should be coming from their parents.

That may be more easily said than done. Young people have been known to stretch the truth when asked for their ages, and many are more technologically savvy than their parents. Then, there’s the matter of parental indifference.

Facebook is not supposed to be used by people younger than 13. But in 2011, a survey of over 1,000 parents found that fully half of them said their children were on Facebook, even though they did not meet the age requirement.

Consumer Reports has estimated that more than five million Facebook users are under 13. The magazine has also reported that many parents see social networking as a sign of maturity, and they allow children to lie about their ages to gain that “right of passage.”

Last year, the FTC levied some hefty fines on firms that took children’s privacy lightly. With an electronic device now in the hands of virtually everyone, the time for strict enforcement of this and other privacy laws is here.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit http://necontact.wordpress.com or email contacexdir@live.com.

http://bangordailynews.com/2013/07/07/business/apple-reimburses-parents-whose-children-made-in-app-purchases/ printed on September 22, 2014