Suit Challenging Charges for Minors' In-App iTunes Purchases Survives Motion to Dismiss

Mobile Commerce

On March 31, the U.S. District Court for the Northern District of California denied, in large part, a motion to dismiss claims brought by parents of children who made in-app purchases from the parents’ iTunes accounts. In re Apple In-App Purchase Litigation, No. 11-1758, 2012 WL 1123548 (N.D. Cal. Mar. 31, 2012). The parent plaintiffs sued Apple on behalf of a putative class claiming that apps provided by Apple and advertised as free allowed children, without the parents’ knowledge, to make in-app purchases of online game supplies during a 15-minute window following the parent’s initial account authentication. The parents alleged that each purchase by a minor under these circumstances constituted separate, voidable contracts with Apple that may be disaffirmed by a parent or guardian. Apple countered that the only contracts at issue are those between it and the iTunes account holders, and the terms and conditions of those contracts provide that account holders are “solely responsible for maintaining the confidentiality and security of [their] Account and for all activities that occur on or through [their] Account.” In denying the motion to dismiss, the court held that the complaint can not be dismissed as a matter of law because Apple offered no case law to support its contention that the terms and conditions constitute a relational contract that governs each subsequent transaction. Further, the court allowed to proceed (i) claims under California’s Consumer Legal Remedies Act because allegations that Apple omitted material facts to induce minors into buying additional gaming products were actionable, and (ii) Unfair Competition Law claims because plaintiffs alleged all three prongs of the UCL, properly pleading that Apple’s actions were unlawful, unfair, and fraudulent business acts or practices.