Apple Inc. (AAPL) to Pay $32.5 Million for Unauthorized Mobile App Purchases by Children, Rules FTC

Apple Inc. will refund approximately $32.5 million to consumers following complaints of accidental app downloads by children without the parent's discretion.

The refund by Apple was made following the U.S. Federal Trade Commission's ruling on Jan. 15. In addition to refunding consumers, Apple will be required to adjust billing practices that will ensure app purchases require a parent's consent.

"Whether you're doing business in the mobile arena or the mall down the street, fundamental consumer protections apply," said FTC Chairwoman Edith Ramirez. "You cannot charge consumers for purchases they did not authorize."

According to Chairwoman Ramirez, it is likely children spent millions on mobile apps without parental awareness. One example provided to the FTC was a girl spending $2,600 while playing the "Tap Pet Hotel" game.

The FTC apparently received "tens of thousands of complaints" from consumers stating they did not authorize the app purchases.

As Reuters reported, Apple CEO Tim Cook issued a memo to employees about the FTC's ruling. According to Cook, Apple had already settled a case regarding unauthorized app purchases in June 2013.

"It doesn't feel right for the FTC to sue over a case that had already been settled. To us, it smacked of double jeopardy," wrote Cook in the memo. "However, the consent decree the FTC proposed does not require us to do anything we weren't already going to do, so we decided to accept it rather than take on a long and distracting legal fight."

"The FTC complaint alleges that Apple does not inform account holders that entering their password in the company's App Store opens a 15-minute window in which children can incur unlimited charges with no further action from the account holder," Reuters noted.

Ramirez, however, stated the 15-minute window was not the main issue.

"What we challenge is the fact that Apple does not inform users of the existence of the window," continued the FTC chairwoman. "When parents enter a password, they do not know the full scope of charges they could incur."

The FTC's ruling went 3 to 1 with commission member Joshua Wright voting no.

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