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112-3108 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

COMMISSIONERS: Edith Ramirez, Chairwoman 

 Julie Brill 

 Maureen K. Ohlhausen 

 Joshua D. Wright

In the Matter of 

APPLE INC., a corporation.

DOCKET NO. C-4444 

COMPLAINT

The Federal Trade Commission, having reason to believe that Apple Inc. (“Apple” or 

“Respondent”) has violated provisions of the Federal Trade Commission Act (“FTC Act”), and it 

appearing to the Commission that this proceeding is in the public interest, alleges: 

1. Respondent is a California corporation with its principal place of business at 1 

Infinite Loop, Cupertino, California 95014. 

2. Respondent has billed for charges related to activity within software applications 

(“apps”) consumers download to their iPhone, iPod Touch, or iPad devices (“Apple mobile 

devices”) from Respondent’s app store. 

3. The acts and practices of Respondent alleged in this complaint have been in or 

affecting commerce, as “commerce” is defined in Section 4 of the FTC Act. 

RESPONDENT’S BUSINESS PRACTICES 

4. Apple offers thousands of apps for free or a specific dollar amount, including 

games that children are likely to play. In many instances, after installation, children can obtain 

virtual items within a game, many of which cost money. Apple bills charges for items that cost 

money within an app—“in-app charges”—to the parent. 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 does not inform 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. Through these practices, Apple often 
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fails to obtain parents’ informed consent to charges incurred by children. Since at least March 

2011, tens of thousands of consumers have complained about unauthorized in-app charges by 

children, and many consumers have reported hundreds to thousands of dollars in such charges. 

Parents and other iTunes account holders therefore have suffered significant monetary injury. 

Background on Apple’s App Store 

5. Apple offers apps through its App Store, a digital store preloaded on Apple 

mobile devices. Apps provide a wide variety of mobile computing functionality, allowing users 

to, for example, browse the Internet, check the weather, or play games. 

6. According to Apple’s app developer guidelines, before it agrees to offer any app 

designed by a third-party developer in the App Store, it reviews the app’s functionality, content, 

and user experience. Apple generally assigns each app it sells to at least one topical category, 

such as “Games” or “News.” Certain categories expand into subcategories. The “Games” 

category, for instance, includes subcategories like “Family,” “Kids,” and “Strategy.” Apple also 

groups apps by price, including the top “Free” apps and top “Paid” apps. 

7. Apple charges account holders for certain user activities within some apps. These 

in-app charges generally range from $0.99 to $99.99 and can be incurred in unlimited amounts. 

In many instances, the apps containing in-app charges are games that children are likely to play. 

8. Before consumers can install any app, Apple requires that consumers link their 

Apple mobile device to an iTunes account, funded by a credit card, PayPal account, gift 

certificates, prepaid cards, or allowance credits. Apple bills consumers’ iTunes accounts for App 

Store transactions and in-app charges, and retains thirty percent of all revenue. According to 

Apple’s stated policy, all App Store transactions (including in-app charges) are final. 

Installing an App from Apple’s App Store 

9. To install an app, a parent or other account holder must first locate it by searching 

for the app by keyword (e.g., the name of the app) or by browsing the various categories and 

subcategories within the App Store. If an account holder searches for an app by keyword, the 

search results display as scrollable tiles (referred to herein as “Search Tiles”). If an account 

holder finds an app listed in a category or subcategory, he or she can click on the name of the 

app to access additional information (displayed on an “Info” page). 

10. Each Search Tile and Info page contains a button (the “Price Button”) labeled 

with the price of the app: either “FREE” or a specific dollar amount. Clicking on the Price 

Button—on either the Search Tile or the Info page—will begin the app installation process. A 

sample Search Tile (on the left) and Info page (on the right) appear below. 
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As pictured above, Apple displays the words “Offers In-App Purchases” in small print on the 

Info pages (not the Search Tiles) of apps with in-app charges. Prior to spring 2013, Apple did 

not display that language. Neither the Search Tile nor the Info Page explain what “In-App 

Purchases” are (including that they cost real money or how much) or that entering the iTunes 

password within the app will approve a charge and initiate a fifteen-minute window during 

which children can incur charges without further action by the account holder. 

11. To initiate app installation, the account holder must press the Price Button on the 

app’s Search Tile or Info page. When pressed, the Price Button changes so that it displays the 

word “INSTALL” instead of the price. If pressed again, the app installation process begins. 

12. Next, Apple prompts account holders for their iTunes account password before 

installation proceeds. This prompt (the “Password Prompt”) is the same or similar to the ones 

depicted below. 

 
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The Password Prompt does not contain any information about in-app charges. Once the account 

holder enters the iTunes account password and presses “OK,” the app is installed on the device. 

13. As described in paragraph 4, Apple often caches the iTunes password for fifteen 

minutes after it is entered. During this fifteen-minute window, Apple does not display the 

Password Prompt again. 

Incurring In-App Charges 

14. After an account holder installs an app, a user can incur in-app charges. In many 

instances—particularly for apps that children are likely to play and that are, for example, rated as 

appropriate for four-year-olds—these users are children. In many instances, parents have 

complained that their children could not or did not understand that their activities while playing 

the app could result in charges that cost real money. 

15. When a user engages in an activity associated with an in-app charge (e.g., clicking 

on a button to acquire virtual treats for use in a game), Apple displays a popup containing 

information about the virtual item and the amount of the charge (the “Charge Popup”). A child, 

however, can clear the Charge Popup simply by pressing a “Buy” button. 

16. In many instances, during the fifteen-minute window following installation of an 

app (as described in paragraph 13 above), Apple has not displayed a Password Prompt for any 

in-app charges. This has allowed children to incur in-app charges simply by pressing the “Buy” 

button on each Charge Popup displayed during that fifteen-minute period. Regardless of the 

number or amount of charges incurred during this period, Apple has not prompted for additional 

password entry in these instances. 

17. In many other instances, Apple displays a Password Prompt—identical to the 

Password Prompt displayed prior to installation of the app—after a child clears the Charge 

Popup. A sample Password Prompt appearing within an app is below. 

The Password Prompt does not contain any information about in-app charges. Once the account 

holder enters the iTunes account password and presses “OK,” Apple bills the in-app charge to 

the linked iTunes account. By default, entering the iTunes password and pressing “OK” triggers 

a fifteen-minute window during which Apple does not display the Password Prompt for 
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subsequent in-app charges, allowing children to incur charges without password entry for fifteen 

minutes. 

18. In September 2013, on devices running Apple’s latest operating system, Apple 

reversed the order of the process described in paragraphs 15-17, displaying the Password Prompt 

before the Charge Popup. If the account holder enters the iTunes password and presses “OK,” 

Apple displays the Charge Popup. Once a user clicks “Buy” on the Charge Popup, Apple bills 

the in-app charge to the linked iTunes account. By default, Apple also initiates a fifteen-minute 

window during which it does not display the Password Prompt for subsequent in-app charges. 

19. Neither the Password Prompt nor the Charge Popup explains that entering the 

iTunes password may approve the charge described on the Charge Popup and initiate a fifteenminute window during which children can incur charges without further action by the account 

holder. 

20. In many instances, Apple does not obtain an account holder’s informed consent 

before billing for in-app charges by children. In particular, nowhere during the processes 

described in paragraphs 9 through 19 does Apple inform account holders that password entry—

whether at installation or before incurring a particular in-app charge—triggers a window during 

which users can incur unlimited charges without further action by the account holder. 

Apple Bills Many Parents for Unauthorized In-App Charges Incurred by Children 

21. Many of the apps that charge for in-app activities are apps that children are likely 

to use. Indeed, many such apps, according to age ratings Apple uses in the App Store (4+, 9+, 

and 12+), are expressly described as appropriate for children. In addition to the age ratings, 

many apps that charge for in-app activities are listed in the “Kids” or “Family” categories in the 

App Store, are described or marketed as suitable for children, or are widely used by children. 

22. Many of these games invite children to obtain virtual items in contexts that blur 

the line between what costs virtual currency and what costs real money. The app “Dragon 

Story,” for example, is a game in which children hatch, raise, and breed virtual dragons. 

Children use “gold,” “coins,” and “food” to play the game. The game sometimes informs 

children that they are “low on food!” and that a dragon is “hungry,” and provides a link to a 

screen titled “Stock Up!” The “Stock Up!” screen sells “gold” (virtual currency that costs real 

money) alongside “coins” (virtual currency that can only be obtained with other virtual currency) 

and “food” (a virtual item that can only be obtained with virtual currency). Various quantities of 

gold cost various amounts of real money, with the largest amount (2900 gold) costing $99.99. 

The App Store describes Dragon Story, which is rated 4+, as the “BEST looking FREE dragon 

game” for Apple mobile devices. 

23. Similarly, the app “Tiny Zoo Friends” challenges children to build and maintain a 

zoo whose “Zoo Value” is described in terms of dollars. That figure, however, does not 

correspond to real money, and instead is a score that varies based on a child’s progress within the 

game. By contrast, the prices of the game’s virtual currency—“coins” and “bucks”—are also 

described in terms of dollars, but that currency costs real money to obtain. From a screen called 
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“Zoo Bucks,” for instance, a child may obtain various quantities of “bucks,” including “10 

Bucks” for $0.99 or “3,500 Bucks” (also called a “Mountain of Bucks”) for $99.99. Apple lists 

Tiny Zoo Friends with a rating of 4+. 

24. Since at least March 2011, Apple has received at least tens of thousands of 

complaints related to unauthorized in-app charges by children in these and other games. 

25. Many consumers report that they and their children were unaware that in-app 

activities would result in real monetary loss. For example, one App Store reviewer complaining 

about $534 in unauthorized charges incurred in two days described Dragon Story as “sucker[ing] 

young children into spending huge amounts of money” without their parents’ knowledge. A 

parent whose seven-year-old incurred $500 in unauthorized charges playing Tiny Zoo Friends 

one afternoon commented that “children . . . cannot possibly understand” that they are spending 

real money. 

26. In many games with in-app charges, consumers report that Apple billed for in-app 

activities without obtaining their consent. For example, one parent learned from her credit card 

company that her daughter had incurred $2600 in charges in the 9+ app “Tap Pet Hotel.” 

Another consumer reported that her niece incurred $113.46 in unauthorized charges while 

playing the 4+ app “Racing Penguin, Flying Free.” According to the consumer, her niece did not 

know the iTunes password, but was able to incur the charges inside the fifteen-minute window 

during which Apple does not prompt account holders for a password. Apple has continued to 

receive complaints about millions of dollars of unauthorized in-app charges by children. 

 

27. Many children incur unauthorized in-app charges without their parents’ 

knowledge. Even parents who discover the charges and want to request a refund face a process 

that many consumers describe as cumbersome, involving steps that do not clearly explain 

whether and how a consumer can seek a refund for unauthorized in-app charges incurred by 

children. Indeed, as noted in paragraph 8 above, Apple’s stated policy is that all App Store 

transactions are final. 

COUNT I 

Unfair Billing of In-App Charges 

28. In numerous instances, Respondent bills parents and other iTunes account holders 

for children’s activities in apps that are likely to be used by children without having obtained the 

account holders’ express informed consent. 

29. Respondent’s practices as described in paragraph 28 cause or are likely to cause 

substantial injury to consumers that consumers themselves cannot reasonably avoid and that is 

not outweighed by countervailing benefits to consumers or competition. 

 
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30. Respondent’s practices as described in paragraph 28 therefore constitute unfair 

acts or practices in or affecting commerce in violation of Section 5 of the FTC Act, 15 U.S.C. § 

45(a) and (n). 

THEREFORE, the Federal Trade Commission this twenty-fifth day of March, 2014, has 

issued this complaint against Respondent. 

By the Commission, Commissioner Wright dissenting. 

Donald S. Clark 

Secretary 

SEAL: