Class action based on in-app purchases for free apps allowed to proceed against Apple

May 3, 2012 by

An iPhone owner whose daughter downloaded $200 worth of “Zombie Toxin” and “Gems” through in-app purchases on his iPhone has been allowed to pursue a class action suit against Apple for compensation of up to $5 million.

Garen Meguerian of Pennsylvania launched the class action case against Apple in October 2011 after he discovered that 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.  This month, Judge Edward J. Davila in San Jose District Federal Court has allowed the case to go to trial, rejecting Apple’s claim that the case should be dismissed.

Mr. Meguerian claimed that Apple was unfairly targeting children by allowing games geared at kids to push them to make purchases.  He describes games that are free to play but require purchases of virtual goods to progress as “bait apps” and says they should not be aimed at children.

Numerous gaming apps are offered for free, although many such games are designed to induce purchases of what Apple refers to as “In-App Purchases” or “In-App Content”, i.e. virtual supplies, ammunition, fruits and vegetables, cash and other fake “currency”, etc. within the game in order to play the game with any success.

These games are highly addictive, designed deliberately so, and tend to compel children playing them to purchase large quantities of Game Currency, amounting to as much as $100 per purchase or more.

The court case quotes a description from an article on the game Smurfs’ Village: “Players are lured in by enticing pictures of huge bucketfuls of Smurfberries, and just a couple of taps is all it takes to drain money out of an iPhone account holder’s credit card.”

The Smurfs’ Village app, where smurfberries retail at $4.99 for 50 or $59 for 1,000 has already come under criticism by the US Federal Trade Commission and Australian regulators.

Arguing for the case to be dismissed, Apple said that parents who didn’t want their children to make in-app purchases shouldn’t give their children their iTunes passwords.

In early 2011, Apple changed its purchase protection policy — meaning that the iTunes password had to be entered for every purchase made.  Previously entering the password once had left the account unlocked for 15 minutes, allowing anyone to download anything, a practice which the case alleges allowed children to buy things without the permission of their parents.

The judge said that even if parents had given their children passwords, many parents were misled by Apple’s presentation of these “freemium” games as free and that Apple didn’t adequately inform consumers about the potential costs.  Judge Davila has allowed the case to continue.

Categories: Class Actions of Interest

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Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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