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Wednesday, May 9, 2012

iTunes in-app purchases: Parents' Relational Contract or Kids' Separate, Voidable Contracts?

2_itunes_10_iconBack in March (I am behind in my blogging), the U.S. District Court for the Northern District of California denied Apple’s motion to dismiss a class action brought by parents and guardians “who (a) downloaded or permitted their minor children to download a supposedly free app from Apple and (b) then incurred charges for game-related purchases made by their minor children, without the parents' and guardians' knowledge or permission.”  The court held that children who used their parents' iTunes accounts to rack up unauthorized charges for supplies for “free” games during a 15-minute window that the account automatically remained open after password authentication may have entered into separate contracts with Apple that are voidable by their parents.

There are games in Apple's iTunes store that are free to download but let companies charge users for products and services when the application is launched, so-called "in-app purchases."  The parents allege that each in-app purchase constitutes a separate and voidable contract between Apple and their minor children, which may be disaffirmed by a parent or guardian on behalf of the minors.  Apple argued for dismissal on the pleadings because the relevant contractual relationship governing the in-app purchases is between Apple and the parents and is based on the original Terms & Conditions signed by parents, making the purchases non-refundable.  Apple contends that the Terms & Conditions governs all subsequent purchases made using the iTunes account.

The court noted that, on a motion to dismiss, it is required to construe the complaint in the light most favorable to the plaintiffs/parents.  In light of that standard, the court held:

Apple argues that Plaintiffs' First Cause of Action should be dismissed as a matter of law, and yet offers no case law to support its contention that the Terms & Conditions constitute a relational contract and that each subsequent transaction between a minor child and Defendant is governed by the terms of the relational contract.

The parents seek reimbursement for the charges (which can run into the hundreds, even thousands).  If the parents are reimbursed, do the kids have to return the $25 buckets of smurfberries they purchased in Smurf Village?  What if the berries are already eaten?

Here's an idea for the parents: disable in-app purchases on the device:

In re Apple In-App Purchase Litigation, No. 5-11-cv-1758 (N.D. Cal. Mar. 31, 2012).

[Meredith R. Miller]

 

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Comments

My daughter (6yo) recently got caught on this one but it wasn't a great deal of money and my interest is partly parental and partly professional. I've asked all the same contract questions as the plaintiffs and I noticed that Apple was due to file their defence to these matters on May 24. I was wondering if you have any idea how this went or could point me in the right direction to find the answers?

Regards
WD Cant
Perth
Western Australia

Posted by: Wayne Cant | Jun 20, 2012 3:17:06 AM

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