An iPhone-owner whose daughter downloaded $200 worth of “Zombie Toxin” and “Gems” games through in-app purchases on his iPhone was recently granted the right to pursue a class action suit against Apple for compensation of up to $5 million.
San Jose District Federal Court Judge Edward J. Davila rejected Apple’s motion to dismiss the suit on all but one count. As a result, the case may proceed to trial.
Pennsylvania resident Garen Meguerian launched the 2011 class action case against Apple soon after he discovered his nine-year-old daughter had been draining his credit card account through in-app purchases on “free” games including Zombie Cafe and Treasure Story. According to the plaintiff’s complaint, Apple is ultimately responsible for the purchases because it failed to disclose (1) that game currency was embedded in the apps, and (2) that the currency could be bought for up to 15 minutes after the app was purchased without requiring re-entry of a password. As a result, children were able to download and play paid apps without the knowledge or consent of their parents for 15 minutes after the parent entered his or her password.
The lawsuit alleges that Apple violated the US Consumer Legal Remedies Act “by actively marketing and promoting certain gaming apps as free or costing a nominal fee with the intent to induce minors to purchase in-app game currency.” According to Meguerian, Apple unfairly targeted children by allowing “bait apps”—free or nominally priced games that require the purchase of virtual goods to progress to higher or more advanced levels—to be geared to children.
While numerous gaming apps are offered for free, some such games are designed to induce purchases of what Apple refers to as “In-App Purchases” or “In-App Content” within the game in order to play the game with any success. These “In-App” items include (but are not limited to) virtual supplies, ammunition, fruits and vegetables, cash and other fake “currency”). As Meguerian learned, the costs can add up to more than $100 per purchase.
Plaintiff alleges the games at issue are deliberately designed to be highly addictive, so as to compel the children who play them to buy large quantities of game currency. The Federal Trade Commission recently criticized the game Smurfs’ Village for this very reason. In that game, “players are lured in by enticing pictures of huge bucketfuls of Smurfberries” which can be purchased for $4.99 for 50 or $59 for 1,000. As an article quoted in the court case contends, “just a couple of taps is all it takes [in Smurfs’ Village] to drain money out of an iPhone account holder’s credit card.”
In its motion to dismiss, Apple argued that parents who didn’t want their children to make in-app purchases shouldn’t give them their iTunes passwords. In response, the court reiterated plaintiff’s claims that Apple misled consumers into thinking the games at issue were free and did not adequately inform them of the potential costs. As the complaint alleges, “Had any Plaintiff or other member of the class known what their children were purchasing and for how much, they would not have permitted the sales transaction from being consummated.” Judge Davila held there was sufficient evidence to allow the case to move forward.
Apple changed its purchase protection policy in 2011, thereafter requiring the iTunes password to be entered every time a purchase is made.
To read the court judgment on defendant’s motion to dismiss, click here.
Why it matters: While businesses are constantly seeking ways to make it easier for their customers to purchase their products and services, they must be careful not to create situations such as this where unintentional sales occur without the consent or knowledge of the account holder who will be charged. Businesses must ensure that the technology they use protects customers—and their children—from making purchases they never intended to make. Federal and state regulators are likely to be even more watchful when there is a potential for children to be involved, as that may raise the issue whether the business intended to target minors for easy sales.