According to CNET, South Korea’s Fair Trade Commission (FTC) has ordered Google and Apple to remove specific clauses pertaining to refunds contained within applications’ terms and services on both Google’s Play Store and Apple’s App Store (for iPhone and iPad). The Commission declared that the clauses were, “explicitly unfair and responsible for damages to the consumer”.
In a press release, South Korea’s FTC said;
‘‘We expect the measure, aimed at protecting consumers, will have a ripple effect on similar cases throughout the world.”
For the Google Play Store, this means that Android apps have had their non-refundable clauses removed, and developers will be required to create refund policies. Apps that offered free trial periods will no longer be allowed to use the label “free trial” and can no longer automatically charge consumers at the end of the trial period.
The affect on Apple’s App Store, developers will be required to notify customers of any modified terms and conditions beforehand and offer an option to cancel and receive a refund should they not agree with the new terms. In the same way, in-app purchases can also be fully refunded.
According to the new ruling, the new policy does not only affect developers, but also consumers. If a consumer violates the apps’ terms and conditions, they are responsible for any damages. The developer must clearly state the violation and it must be evident. In addition, the damages claimed by the developer must be causally relevant to the violation made by the customer.
Previously, where developer employees were exempt from any blame, if there are now any reasons that damages are attributable to employees, they can now be held responsible whether negligent or not.
Hwang Won-chul, head of the KFTC’s Adhesion Contract Division, said;
“The FTC’s corrective orders will become benchmark cases for other countries, which face growing customer complaints over unfair provisions in contracts of mobile webstore operators.”
Not yet confirmed by Apple, Won-chul also added;
“While Google will limit its response to the FTC to the domestic market, Apple said it would consider applying the revised contract terms globally.”
Given Apple’s rather strong stance on refunds, and simply the difficulty in acquiring ones that Apple approves, it is rather surprising that Apple would volunteer to implement the change globally, but it will be interesting to see what the long term effects of the ruling will be, and how quickly Apple moves to spread out the policy.