FTC Announces Settlement Over In-App Purchases By Minors

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On January 15, the FTC announced that a major mobile technology company agreed to resolve allegations that it violated Section 5 of the FTC Act by failing to inform account holders that entering their password on their mobile device would open a 15-minute window in which children could incur unlimited charges within certain mobile applications with no further action from the account holder (in-app purchases). The settlement is open to public comment through February 14, 2014. Once finalized, the proposed settlement will require the company to refund at least $32.5 million to consumers who allegedly were billed for accidental or unauthorized in-app purchases by minors. The company will manage the remuneration process, including by providing notice to consumers and providing refunds promptly upon consumer request. Any funds remaining after 12 months of the final agreement must be remitted to the FTC. The company also must alter its billing practices to ensure it obtains express, informed consent before charging accountholders for in-app purchases.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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