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Apple's in-app purchase settlement faces approval

The settlement that will give some 23 million iTunes account holders a chance at refunds from in-app purchases by minors is closer to approval.


SAN JOSE, Calif. -- The settlement that will give some iTunes customers a refund for in-app purchases made by minors marched one step closer to approval today.

The two sides met in a federal courthouse here to hash out some final details before it's passed along to a judge for approval early next week.

As part of the proposed settlement, Apple will be required to pay out $5 in iTunes credit to those who say purchases were made on their device by a minor, and without them being aware of it. The company plans to send notices to more than 23 million iTunes account holders who bought something from within one of of the "qualified apps."

During today's hearing, Apple attorneys noted that the company believes the actual number of affected customers to be much smaller, given that the purchases would have needed to been made by minors, and without permission. The company also said that the "vast majority" of purchases were under $5.

Customers who spent more than $30 or who no longer have an iTunes account can choose to get a cash refund, as long as they meet a handful of requirements, including filling out a form that details what apps the charges originated from. U.S. District Court Judge Edward Davila today raised some concerns with how much effort would be needed by consumers to track down purchase information.

"It seems like you're asking the plaintiffs to do a lot," Davila told both sides, pointing to the fact that users would need to seek out their purchase history in the event that they were filing for something besides the $5 iTunes gift card that will be offered. "Apple has this information," he continued. "They're in the best position to retrieve this information."

Apple's attorney countered by noting that users could quickly find their entire iTunes purchase history, as well as search for the apps in question, using an online tool that will be included on the settlement Web site when it goes live.

Judge Davila also raised concerns about the plan to send out notices digitally, saying the U.S. postal service could benefit with the business. Both sides successfully made the case that the digital nature of the in-app purchase issue would bring about a high response by e-mail, and that notices would be sent by mail for any addresses that bounced.

The 2011 suitstemmed from parents who complained that it was far too easy to buy digital goods in apps and games without the need to re-enter an Apple ID password. In practice, this meant that a parent could download a free or paid title using their password, then the child (or someone else) could proceed to make purchases without those credentials, as long as it was within a certain time period.

Apple changed that behavior as part of a system software update in March 2011, but not before some parents were hit with massive bills. A report from the BBC earlier today noted that it's still possible to rack up charges, given the case of a 5-year-old from southwest England who spent more than $2,500 in purchases on his parents' iPad without the password, an amount that was reportedly refunded by Apple.

The parties plan to file a finalized version of the settlement on Monday. A final decision on the settlement from Davila is expected in the coming weeks.