Parents shocked by children running up massive bills - some up to US$1,400 - by making "in-app purchases" on their Apple iPhone or iPad, will get cash or iTunes Store credit as part of a settlement that could cost the company up to US$100 million.
The move would settle a lawsuit filed in 2011 by five parents in California who complained that Apple hadn't made it clear that "free" apps downloaded from the App Store could also include paid-for extras, which wouldn't necessarily require the child to provide the parent's Store password. As many as 23 million people could receive compensation, the settlement suggests.
The lawsuit alleged that "Apple failed to adequately disclose that third-party game apps, largely available for free and rated as containing content suitable for children, contained the ability to make in-app purchases."
The company is offering a settlement - agreed by the plaintiffs - in which people who can show that a minor made an in-app purchase (IAP) can claim either iTunes Store credits, or cash settlements in cases where parents say the cost of purchases exceeded US$30. The settlement is understood to apply only to the US.
In February 2011, the US federal trade commission said it was launching an inquiry into IAPs because of concerns that children were playing games: one game that came in for particularly criticism was Capcom's game Smurfs' Village, in which children were encouraged to buy US$99 barrels of Smurfberries - which really did cost US$99 to parents with the account.
IAPs, and the protections around them, have been controversial topics in the App Store since it was introduced in 2009.
App developers discovered that they could be used to dramatically raise an app's potential revenue - because rather than paying the full amount up front, users would spread payments as they played the game.
Because the password was not required inside the game, parents were frequently unaware that their children were buying "items". Later changes by Apple introduced a timeout function for the password, so that users would have to re-enter it during games to make purchases, and subsequently an absolute requirement.
A US court has to approve the proposed settlement, which will be heard on Friday.