April 22, 2012

Although Apple is almost universally-loved by fans of Mac computers, iPads, iPods and the iPhone, none of that consumer joy has been able to keep them out of the crosshairs of several lawsuits. Last year, a group of parents came together in a class action suit against the technology company, claiming that children have been duped into spending money on additional offerings embedded within free games they had downloaded. Apple pushed for the suit to be dismissed, but a judge recently ruled that the allegations held up. So now the class action lawsuit will continue.
The games are generally described in the industry as “freemium”, meaning that they can be downloaded as apps for no charge, but then push additional charges on the users, such as new levels to unlock, or the purchase of fun items necessary for expanded gameplay. Of course purchase of these in-game items costs real-world dollars, a fact the parents’ group say that children should not be expected to understand. For example, there’s a popular Smurfs game that asks players to purchase packs of smurfberries, which are used for transactions within the game. Each pack of smurfberries costs as much as $59. And in the smash hit “Draw Something“, kids must pay to unlock additional colors. Because these are apps purchased through the App Store, kids will select these items, not knowing that their parents’ credit cards are stored within iTunes and are being charged for each one of these purchases.
The plaintiff group in the class action lawsuit is claiming that Apple acted falsely by advertising these app games as free, and that their purchase policy is too simple to leave in the hands of children. Of course, the argument can be made that a password is required for any iTunes purchase, as well as clicking on a window that alerts the user they are buying something. But at the time of the suit, iTunes was set up so that purchases could be made for a full fifteen minutes after the password was entered without having to enter it again, meaning a parent could have entered the password for the free download, and then left it with their kids. Apple has changed their policy on that since the suit, but that doesn’t affect the larger accusation, that Apple’s promotion of these “freemium” apps had “the intent to induce minors to purchase”.
Though the class action lawsuit will go forward as planned, it remains to be seen if it will actually be successful. But now that Apple’s request for dismissal has been denied, it is guaranteed that they will have to go to court over this, and mount a solid defense. And class action suits always bring a ton of publicity, so this could expand into a PR issue for Apple, especially as they are accused of essentially luring children into spending their parents’ money with free apps. Win or lose, it probably won’t lead to any significant changes in the app marketplace. So if you’re concerned about your children making purchases, keep an eye on your iTunes account. Or think about setting aside a certain amount of money each month on your Chase Freedom Card earmarked for your kids’ gaming habit.
Editor’s Note
Thanks to Evan Fischer for this quest post. He is a freelance writer and part-time student at California Lutheran University in Thousand Oaks, California.
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