Apple to refund at least $32.5 million in disputed kids' app purchases

Apple to refund at least $32.5 million in disputed kids' app purchases Wed, Jan 15 19:30 PM EST image 1 of 2 By Diane Bartz and Alina Selyukh WASHINGTON (Reuters) - Apple Inc will refund consumers at least $32.5 million to settle a longstanding complaint that the technology company billed U.S. consumers for charges incurred by children through mobile apps without their parents' consent. Under the terms of the settlement, announced on Wednesday by the U.S. Federal Trade Commission, Apple also will be required to change its billing practices to ensure it obtains consent from parents before charging for such in-app spending. "Whether you're doing business in the mobile arena or the mall down the street, fundamental consumer protections apply," said FTC Chairwoman Edith Ramirez. "You cannot charge consumers for purchases they did not authorize." She estimated that children spent millions of dollars without their parents' knowledge, with one mother telling the agency that her daughter spent $2,600 while playing the game "Tap Pet Hotel." Ramirez said the commission had received "tens of thousands of complaints" from consumers over the unauthorized purchases through apps such as Dragon Story and Tiny Zoo Friends. In a memo to employees, Apple CEO Tim Cook referred to a class action settlement reached in June which required the company to pay around $100 million to parents whose children made unauthorized purchases. "It doesn't feel right for the FTC to sue over a case that had already been settled. To us, it smacked of double jeopardy," Cook wrote. "However, the consent decree the FTC proposed does not require us to do anything we weren't already going to do, so we decided to accept it rather than take on a long and distracting legal fight." The FTC complaint alleges that Apple does not inform account holders that entering their password in the company's App Store opens a 15-minute window in which children can incur unlimited charges with no further action from the account holder While the refunds will be available for purchases through apps aimed at children, all Apple apps will get new disclosures, the wording of which has not yet been finalized. "To be clear, the issue is not that Apple opens a 15-minute window for in-app purchases," Ramirez said. "What we challenge is the fact that Apple does not inform users of the existence of the window. When parents enter a password, they do not know the full scope of charges they could incur." Apple shares showed little response to the news and in midafternoon trading were up 2.1 percent at $558.03, holding onto gains posted earlier. "Protecting children has been a top priority for the App Store from the very beginning, and Apple is proud to have set the gold standard for online stores by making the App Store a safe place for customers of all ages," said Apple spokesman Steve Dowling. The commission vote to accept the consent agreement package was 3-1, with Commissioner Joshua Wright, a Republican, voting no. In a statement, Wright argued that the FTC failed to show that the "extremely small" group of consumers who were injured justified a finding that Apple was unfair. (Reporting by Diane Bartz and Alina Selyukh.; Additional reporting by Poornima Gupta in San Francisco. Writing by Ros Krasny; Editing by Andre Grenon and Cynthia Osterman) ===================== Want a bunch of cheap Facebook fans? Don’t make this mistake Alex Houg•Jan 15th, 2014 Advertising, Facebook, Featured Screenshot 2014-01-08 at 9.53.49 AM 6 cent cost per click. 1,476 fans for only $210. That’s only 14 cents a fan. But look at the targeting. They’re buying traffic from India, Pakistan, Mexico, Thailand, and all sorts of places. Traffic there is a fraction of the cost of the United States, UK, or Canada. Unless you’re able to monetize fans outside of your target country, don’t make this irreversible mistake. Provided you have your campaigns properly split up into audience (fan growth), engagement, and conversion, the junk fans feed into the engagement stage campaign, clogging things up. That means your News Feed campaigns have to work harder, since they are having to also reach your junk fans. That’s wasting money. You can’t remove these fans or exclude them in your targeting, unless you have country-level targeting. We’d rather see your “always on” campaigns (page post ads targeting fans) feeding real fans, even though there is a marginal benefit in appearing to have a large fan base. This tactic is nearly as bad as buying fake fans. What does a bad conversion look like? Notice that the above ad had a 6 cent cost per click and 14 cent cost per fan. That means nearly half of the clicks turned into fans. Sounds good, right? Not terrible, since averages are 50-70%. But look carefully at the combination of ad copy and targeting. Screenshot 2014-01-08 at 10.11.05 AM This ad targets fans of Demi Lovato and then asks if they like Demi Lovato. 4 years ago, this technique could produced fans for fractions of a penny. But remember that when users click “like” on that ad, they think they’re clicking like on a post or saying they like that celebrity — not that they like your page. Becoming a fan from the ad itself is called an in-line like. While it does drive the most effective cost per like, especially using this technique, if you want quality fans, we recommend using a page like story (a sponsored story) or generating fans from page post ads. You want folks who became fans because they love your content and are influenced by activity from their friends. Facebook’s amazing assist The good news in all this is that when you tell Facebook what your objective is, via the new objective-based ads flow, their system will automatically optimize. The ad above got 1,476 fans on 1,711 actions, which means that 86% of actions were fans. Optimized CPM is the default bidding mechanism when you create ads by objective. We strongly recommend you keep it there, unless you are sophisticated enough to override it with CPC bids by audience and placement. There is no free lunch Unless you’re growing your fan base to please an executive or client, you should always have your engagement and conversion campaigns tied into your fan acquisition campaigns. Never do just fan acquisition. One-off tactics can boost you at one point in the funnel, but it won’t drive revenue unless you tie it all together. =================