FTC's regulatory overreach of the year so far: Redesigning the iPad

February 3
11:26 AM 2014

2014 has just opened but the Federal Trade Commission has committed what is most likely its regulatory overreach of the year with its redesign of Apple's iPad, The Wall Street Journal reported. The agency agreed to a settlement with Apple amounting to $32.5 million in a lawsuit that Joshua Wright, the commissioner who dissented with the ruling, said can be summarized with the question, "Do you really want a regulatory agency designing your iPad?"

The report said Wright was not exaggerating inasmuch as his colleagues took Apple to court for a poorly-designed iPad. This is most probably a first for the tech giant which is known for its superior design and ease of use.

The case started after some parents complained that their kids had bought digital currencies in game apps and other virtual goods without their permission. As in other online services, the iTunes store of Apple does not require users to type passwords each time they want to buy something. After a password is provided, users can buy for 15 minutes without the need to log in again, the report said.

After parents complained that their kids bought virtual goods in that time window, Apple made refunds but the lawsuit continued nevertheless. Apple settled last year. The company then made information on how parents can prevent their kids from making unauthorized purchases more prominent and added new steps to making purchases, the report said.

The WSJ reported that would have been the end of the case but FTC decided that it still had to get its own settlement. Apple CEO Time Cook told employees it was a case of "double jeopardy," but said they decided to settle in order to "avoid a long and distracting legal fight."

Wright said in an interview that the FTC's opinion was the most problematic he had seen the agency take so far as far as the potential to cause harm to consumers is concerned. He added that the action "demonstrates a distinct lack of regulatory humility." 

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