Apple to settle class action lawsuit on in-app purchases by minors

IDG News Service - Apple has reached a settlement in a class-action lawsuit that claimed that its app purchase policy did not prevent minor children from running huge expenses for in-app purchases.

Under the settlement proposed to a court in California, Apple has agreed to pay in cash and credits through its iTunes store to a class of U.S. residents who claimed to have paid for "Game Currency" in game apps downloaded from the App Store by minors without their knowledge or permission.

Plaintiff Garen Meguerian, who filed the initial class action complaint in a court in California in April, 2011, alleged that he discovered a series of in-app purchases charged by his then eight-year-old daughter in third-party apps between January and March 2011 without his knowledge or permission, according to court records.

Apple requires its users to authenticate their accounts by entering a password before purchasing or downloading an app or buying game currency, according to the 2011 complaint. Until recently, once the password was entered, the user even if a minor could purchase game currency for the next 15 minutes without entering the password again, it added.

At the time, the plaintiff was unaware that the children's apps offered game currency. Four other plaintiffs made similar allegations which were consolidated in a single case before the U.S. District Court for the Northern District of California, San Jose division.

Class action members could stand to benefit from $5 in iTunes credits to cash payments of $30 or more, depending on their specific circumstances. Apple did not specify in the settlement how much it expected to pay out. The precise size of the proposed settlement class is currently unknown, although the notice will be distributed to over 23 million iTunes account holders who made a game currency purchase in one or more qualified apps, according to the court document.

The court has to still approve the settlement.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com