Analysis of Proposed Consent Order to Aid Public Comment 

In the Matter of Apple Inc., File No. 112 3108

The Federal Trade Commission (“Commission”) has accepted, subject to final approval, 

an agreement containing a consent order from Apple Inc. (“Apple”). 

The proposed consent order has been placed on the public record for thirty (30) days for 

receipt of comments by interested persons. Comments received during this period will become 

part of the public record. After thirty (30) days, the Commission will again review the 

agreement and the comments received, and will decide whether it should withdraw from the 

agreement and take appropriate action or make final the agreement’s proposed order. 

Apple bills consumers for charges related to activity within software applications (“apps”) 

that consumers download to their iPhone, iPod Touch, or iPad devices from Apple’s App Store. 

This matter concerns Apple’s billing for charges incurred by children in apps that are likely to be 

used by children without having obtained the account holders’ express informed consent. 

The Commission’s proposed complaint alleges that Apple offers thousands of apps, including 

games that children are likely to play, and that in many instances, children can obtain virtual items 

within a game app that cost money. Apple bills parents and other adult account holders for items 

that cost money within an app—“in-app charges.” In connection with billing for children’s in-app 

charges, Apple sometimes requests a parent’s iTunes password. In many instances, Apple “caches” 

(that is, stores) the iTunes password for fifteen minutes after it is entered. During this process, 

Apple in many instances has not informed account holders that password entry will approve a charge 

or initiate a fifteen-minute window during which children using the app can incur charges without 

further action by the account holder. The Commission’s proposed complaint alleges that, through 

these practices, Apple often fails to obtain parents’ informed consent to charges incurred by children, 

which constitutes an unfair practice under Section 5 of the FTC Act. 

 

The proposed order contains provisions designed to prevent Apple from engaging in the 

same or similar acts or practices in the future. Part I of the proposed order requires Apple to 

obtain express, informed consent to in-app charges before billing for such charges, and to allow 

consumers to revoke consent to prospective in-app charges at any time. As defined in the 

proposed order, express, informed consent requires an affirmative act communicating 

authorization of an in-app charge (such as entering a password), made proximate to both an 

in-app activity for which Apple is billing a charge and a clear and conspicuous disclosure of 

material information about the charge. Under the definition, the act and disclosure must be 

reasonably calculated to ensure that the person providing consent is the account holder (as 

opposed to the child). The proposed order would require the disclosure to appear at least once 

per mobile device. Apple must come into compliance with the Part I requirements by March 31, 

2014. 

Part II of the proposed order requires Apple to provide full refunds to Apple account 

holders who have been billed by Apple for unauthorized in-app charges incurred by minors. 

Apple will refund no less than $32.5 million for these in-app charges in the year following entry 

of the order, and if such refunds total less than $32.5 million, Apple will remit any remaining 

balance to the Commission to be used for informational remedies, further redress, or payment to 
the U.S. Treasury as equitable disgorgement. To effectuate refunds, Apple must send an 

electronic notice to its consumers that clearly and conspicuously discloses the availability of 

refunds and instructions on how to obtain such refunds. Within 30 days of the end of the 

one-year redress period, Apple must provide the Commission with records of refund requests, 

refunds paid, and any refunds denied. 

Parts III through VII of the proposed order are reporting and compliance provisions. 

Part III of the proposed order requires Apple to maintain and upon request make available certain 

compliance-related records, including certain consumer complaints and refund requests, for a 

period of five years. Part IV is an order distribution provision that requires Apple to provide the 

order to current and future principals, officers, and corporate directors, as well as current and 

future managers, employees, agents, and representatives who participate in certain duties related 

to the subject matter of the proposed complaint and order, and to secure statements 

acknowledging receipt of the order. 

Part V requires Apple to notify the Commission of corporate changes that may affect 

compliance obligations within 14 days of such a change. Part VI requires Apple to submit a 

compliance report 90 days after March 31, 2014, the date by which Apple is required to come 

into full compliance with Part I of the order. It also requires Apple to submit additional 

compliance reports within 10 business days of a written request by the Commission. Part VII is 

a provision “sunsetting” the order after twenty (20) years, with certain exceptions. 

The purpose of this analysis is to aid public comment on the proposed order. It is not 

intended to constitute an official interpretation of the complaint or proposed order, or to modify 

in any way the proposed order’s terms.