Sunday, April 29, 2012

Parents Filed a Class-Action Lawsuit Against Apple Over Free Games That Aren’t Really Free

In April 2011, several groups of parents, whose kids spent hundreds of dollars on in-app purchases while playing “free” games, filed a class action lawsuit against Apple. Until early 2011, once the password was entered, the iTunes allowed to make purchases on the account without requiring any additional verification. Parents claimed that they were unaware that their minor children could make in-app purchases without their knowledge in the fifteen minutes after the parents logged into their iTunes accounts. In the complaint, the parents claimed that every time their minor children made an in-app purchase, they entered into a contract with Apple, which was invalid because they were minors. Additionally, parents alleged that Apple engages in unlawful, unfair, fraudulent and/or deceptive business acts and practices by advertising, marketing, and promoting apps as free or at a nominal cost with the intent to lure minors to purchase game currency. On March 31, 2012, the U.S. District Judge from the Northern District of California, Edward Davila, considered Apple’s motion to dismiss the complaint. The Judge refused to dismiss four out of the five counts against Apple, allowing the case to proceed. The decision (although redacted) can be found here:

Recently, Apple addressed the problem by adding a second layer of password protection. Also, users can now shut down the ability to make in-app purchases entirely.

 Is Apple to blame for what happened? Yes, to some extent. Apple needs to require more detailed and prominent disclosures by the developers about the in-app purchases in the games. Parents are also to blame to some extent. They should not leave their kids alone with iPhones or iPads for extended periods of time. Both parties just need to supervise better. But there is another party involved in this situation that has not been named in the complaint, - the developers who failed to clearly communicate that their free games had in-app purchases. The developers should explain whether their games can be played effectively in the free mode, how many in-app purchases exist, and how much they cost. This is especially relevant in light of the rising concern over the addictiveness of some of the “freemium” games targeting children.

This article is not a legal advice, and was written for general informational purposes only.  If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga.  Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.

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