Apple 'could pay out $100m to settle lawsuit'

Apple could pay out more than $100 million in iTunes Store vouchers according to the proposed settlement to a class action lawsuit filed in California in 2011.

Parents whose children ran up iTunes bills using in-app purchases will be eligible for $5 of iTunes credit. Those whose children ran up bills of more than $5 will be eligible for iTunes credit of up to $30. Customers can claim a cash refund for amounts over $30.

The settlement was proposed last week but brought to light by technology site GigaOm overnight. Apple said it would notify more than 23 million iTunes account holders of the proposal, which must still receive preliminary approval from a federal judge before Apple can begin accepting claims.

To qualify for the settlement parents must fill in an online form saying that they were charged for a "Qualified Game Currency Charge", did not knowingly enter their password or give their password to a minor and have not received a refund from Apple.

The lawsuit was filed against so-called "bait apps", which are free games, typically aimed at children, that tempt players to spend real money on virtual goods within the game. At the time the lawsuit was filed, Apple's iOS software would not ask for a password to be re-entered if it had been entered within the previous 15 minutes.

That meant that parents would enter their password to download a game for their children then hand the device over, not realising that the child would have 15 minutes to make purchases without re-entering the password. Apple has since removed the 15-minute window.

Though the lawsuit applies only to the US, British consumer groups have issued warnings about in-app purchases on all mobile operating systems.

Last month, PhonepayPlus, the premium rate phone number and service regulator, said that complaints about unexpectedly large bills had increased by 300 per cent in a year.

Some of the costs were caused by malware but the regulator warned that many people were running up their bills by not paying attention to how much they were spending in legitimate apps. PhonepayPlus found that two thirds of 11-to-16-year-olds download their own apps and this could lead to unpleasant surprises for parents when the bills arrived.

"Smartphones in children's pockets can burn holes in parents' wallets, so we are working with partners across industry and other agencies to prevent this. This is a real challenge for parents and for us as a regulator," said Paul Whiteing, PhonepayPlus chief executive.