Apple agrees $100 MILLION payout to parents whose children racked up huge bills via In-App purchases

Parents left out of pocket after their children racked up huge bills from 'free' iPhone and iPad games are set for a $100million payout from Apple.

The Silicon Valley giant agreed the compensation to settle a class-action lawsuit brought by parents charged after youngsters downloaded the paid content from iTunes, court filings showed today.

The final settlement figure may vary, but papers revealed that Apple has agreed to offer $5 iTunes vouchers to as many as 23million customers.

Also, those claiming $30 or more from Apple may choose to receive a cash refund instead of an iTunes store credit, according to the filing.

The case involves games such as Angry Birds, Zombie Takeover, Playmobil Pirates, and Racing Penguin, some of which are offered as free downloads on tablets such as Apple's iPad.

However, once children are playing with them, they are hit with pop up advertisements for so-called ‘In-App Purchases' – IAPs.

These might be to purchase coins or extra powers to allow the characters being controlled by the youngsters to go further and deeper into the game.

These payments are taken automatically from the credit cards of the adult owners of the computer or smartphone via, for example, an iTunes or Google account.

Often, the first time a parent finds out about the purchases is when their credit card is rejected at a check-out till or they find a black hole in their current account.

The lawsuit, filed by five parents in 2011, involved allegations surrounding purchases in certain downloaded apps, which plaintiffs claim were made by children without the knowledge or permission of the account holder.

The lawsuit also 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 founder of parenting website Netmums, Siobhan Freegard, told the Daily Mail earlier this month: ‘We have heard of cases where parents have been hit with bills for hundreds of pounds as the apps are often linked to their card details through iTunes. Often the bills aren't immediate and it takes days to find out they have been charged.'

Money down the drain: Payments are taken automatically from the credit cards of the adult owners of the computer or smartphone via, for example, an iTunes or Google account

Last year, six-year-old Jake Sadler spent $1,300 playing Zombie Takeover, which was free to download, on his mother's iPad.

His parents only discovered the problem after receiving a call for their bank's fraud team who had conces with ‘unusual activity' on their account.

Jake's mother Gemma, 31, a nursing support assistant, from Portsmouth, said: ‘We had no idea the money was even going out of our account until the fraud squad at the bank rang us.

‘And when we looked at our bank account and found such a large amount of money missing I felt absolutely sick.'

In theory, Apple accounts require users to input a password to clear any purchases.

However, if the parent uses the password once, this creates a 15 minute window where the child can then make a series of purchases.

Separately, children who have become engrossed in a game will often pester their parents continuously to allow them to make purchases.

Spencer Whitman of app protection firm AppCertain said: ‘App developers are not often altruistic.

‘They often include in-app purchases hidden behind the free price tag. Either they offer a small amount of play, then charge for continued use; offer in-app purchases for more in-game content such as extra areas of play or upgrades; or they constantly interrupt game play to ask for in-app purchases.'

Taking aim at Apple: Today's proposed settlement requires court approval. The court will hear the settlement on March 1.

Justine Roberts, founder of Mumsnet, said: ‘It's all too easy for our children to get sucked into games and, before you know it, they've racked up huge costs buying coins, berries and doughnuts.

‘You do need to keep an eye on your child's device settings and to keep your password for purchases private at all costs.'

Which? executive director Richard Lloyd said: ‘It's far too easy for children to run up huge bills on phone apps when most default settings allow ‘in-app purchases' without asking for a confirmation or password.

‘If your child has run up a huge bill without your knowledge, contact the app store or manufacturer, as you may be eligible for a refund.'

Apple said: ‘All iOS devices have built-in controls that give parents and guardians the ability to restrict access to content, such as inteet access and age-rated content.

‘Parental controls also give parents and guardians the option to tu off functionality, such as purchasing from iTunes, and the ability to tu off in-app purchases.'

Today's proposed settlement requires court approval. The court will hear the settlement on March 1.

Apple could not immediately be reached for comment outside of regular U.S. business hours.