Apple settles in-app purchasing lawsuit with iTunes credits and refunds

iOS in-app purchase (teaser)

Apple today has agreed to settle a nearly two year-old lawsuit with a group of parents over unauthorized in-app purchases made by their kids. The parents complained that the process’ lack of password requirement led to massive iTunes bills.

As part of the preliminary deal, which has yet to be finalized by a judge, Apple will pay eligible class members with a $5 iTunes gift card or the same amount in cash. And for those users who spent more than $30, it’s offering a full refund… 

Here’s a look back at the original complaint:

“Garen Meguerian let his 9-year-old daughter download several free games from the App Store. Several weeks later, he discovered his daughter had purchased approximately $200 of virtual currency like Zombie Toxin and City Cash. Meguerian is suing Apple for damages plus attorney fees.”

Several parents would later join the complaint, including one father whose son racked up a $1200 iTunes bill after purchasing several wagons of ‘virtual smurf berries’ at $99 a pop. This, of course, was before Apple released its iOS 4.3 update.

Prior to iOS 4.3, the App Store would give users a 15-minute window after password authentication to freely make in-app purchases. It was meant to streamline the experience, but after receiving complaints from angry parents, it changed it.

For the proposed settlement (via GigaOm), Apple will be required to send notices to more than 23 million iTunes account holders who bought something in-game from one of of the “qualified apps.” But it’s not known how many were actually affected.

The deal still needs approval from a federal judge. When that occurs, the notification period will begin and Apple will begin accepting claims. After the claims are in, a judge will approve the final settlement and Apple will begin making payments.