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iPhone App Refund Policies Could Cost Devs

Soulskill posted more than 5 years ago | from the money-for-nothin dept.

Cellphones 230

CBRcrash writes "Apparently, if iPhone users decide that they want a refund for an app (users can get a refund within 90 days, according to Apple policy), Apple requires that developers give back the money they received from the sale. But, here's the kicker: Apple will refund the full amount to the user and says that it has the right to keep its commission. So, the developer not only has to return the money for the sale, but also has to reimburse Apple for its commission."

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Not to be an apologist... (4, Insightful)

Richard_at_work (517087) | more than 5 years ago | (#27369369)

But either way, Apple is still providing a service here that both the developers and the consumers are using. Just because the consumer requires a refund doesn't make the cost of providing that service magically disappear.

Re:Not to be an apologist... (4, Informative)

Anonymous Coward | more than 5 years ago | (#27369389)

From the article:

Apple charges a 30% commission on all paid apps sold through the App Store. So basically, developers get 70% of a given sale but if the end-user wants a refund, the developer has to pay Apple 100% of the sale.

We are assuming that Apple still has to pay bank fees on a charge if a consumer wants a refund, but certainly bank charges don't amount to 30 percent.

The point is that the charges are unfair.

Re:Not to be an apologist... (5, Informative)

SausageOfDoom (930370) | more than 5 years ago | (#27369497)

I'd normally be the last person to defend Apple, but to be fair to them it appears the only time a customer can claim a refund is when the developer doesn't release in time, or releases a broken product. Which makes it sound a bit more reasonable.

Re:Not to be an apologist... (5, Interesting)

Jahf (21968) | more than 5 years ago | (#27369829)

Part of the problem IS Apple though. They take a TON of time releasing fixes and updates for some apps. I've got an app, which was one of the reasons that convinced me to buy an iPhone, that took 3 months for Apple to release the update. But it had been in queue after being submitted by the developer for over 3 -months-.

Sorry but no, Apple has a cash cow with the store ... and many other companies are releasing competing stores ... Apple should refund the cost to the customer, too. Or have a "restocking fee" that they won't refund and pocket that. Especially since the entity that determines whether the refund will happen is Apple. The entity that determines the validity of a refund needs to have some skin in the decision.

It won't happen today or even next year ... but Apple is shooting the iPhone in the proverbial foot. Android is continually improving their dev environment and has much better store policies. Blackberry is releasing their store soon and while I doubt their policies are better on the store, their messaging capability still can't be beat. Apple needs to find ways to -strengthen- their position with developers, not piss them off.

Re:Not to be an apologist... (5, Insightful)

Anonymous Coward | more than 5 years ago | (#27369985)

apple wants fewer, better apps. This is an effective way to do it.

Re:Not to be an apologist... (3, Insightful)

GooberToo (74388) | more than 5 years ago | (#27369847)

Which makes it sound a bit more reasonable.

How is holding developers to a standard above what is required of NASA, "more reasonable"?

Re:Not to be an apologist... (1)

Stele (9443) | more than 5 years ago | (#27369991)

Which makes it sound a bit more reasonable.

How is holding developers to a standard above what is required of NASA, "more reasonable"?

Or Apple for that matter.

Re:Not to be an apologist... (-1, Troll)

larry bagina (561269) | more than 5 years ago | (#27370099)

NASA? There's a saying: "Good enough for government work." Apple's standards should be higher.

Re:Not to be an apologist... (1)

mwoliver (688853) | more than 5 years ago | (#27370399)

*SIGH*

This saying was born from an era when government work was head-and-shoulders above par, exceeding even the most stringent of standards. Only in the modern lexicon has it taken a derogatory connotation, mostly due to lazy-ass government workers who can't be disciplined or fired for shoddy work.

Turn your head and cough (-1, Troll)

Anonymous Coward | more than 5 years ago | (#27369501)

Oopps! Looks like Steve has my balls well-vised in his hands !! I can tell you, that ain't no way to check for a hernia !!

damn Steve, you really want it that bad ??

Re:Not to be an apologist... (3, Interesting)

arikol (728226) | more than 5 years ago | (#27369963)

not only bank charges but server, bandwith and maintenance staff.

Nowhere else in retail does the original maker get 70% of the price to himself. People count themselves lucky to receive 10-20%

Apple is treading on thin ice, but has some serious arguments behind themselves.

And BTW, if the makers themselves were running their own store you can bet that the losses from returns would not be any lower.

Re:Not to be an apologist... (4, Informative)

ConfusedVorlon (657247) | more than 5 years ago | (#27370297)

not true.

I get 85-90% of all my sales (on Palm software) that I make through Mobihand.com

they provide a similar service to the appstore;
catalogue
payment processing
first line support

of course they don't have the store on the device - and they don't take 3months to approve my apps.

not that I resent the 30% that apple charge. I actually think it is a fair rate for the excellent job they have done in encouraging users to access and buy apps.

Unfair charges vs. REAL costs. (-1, Flamebait)

geekmux (1040042) | more than 5 years ago | (#27370087)

From the article:

Apple charges a 30% commission on all paid apps sold through the App Store. So basically, developers get 70% of a given sale but if the end-user wants a refund, the developer has to pay Apple 100% of the sale.

We are assuming that Apple still has to pay bank fees on a charge if a consumer wants a refund, but certainly bank charges don't amount to 30 percent.

The point is that the charges are unfair.

Ah, if the developers think those charges are "unfair", perhaps they should take a really hard look at what musicians end up at the end of that greed-riddled food chain. 70% sounds like a damn good percentage to me.

Also developers shouldn't be bitching about an enabling portal like Apple to expose their app to a Global market almost instantly, especially when they take a hard look at their Marketing "expenses" and "effort" involved as they click "Upload" in their underwear while sitting at home...

DoS on developers' bank accounts (4, Interesting)

tepples (727027) | more than 5 years ago | (#27369417)

But either way, Apple is still providing a service here that both the developers and the consumers are using. Just because the consumer requires a refund doesn't make the cost of providing that service magically disappear.

So how does the developer of a pay application prevent someone from doing a DoS on the developer's bank account by asking readers of his blog to buy the app and get a refund?

Re:DoS on developers' bank accounts (1)

Richard_at_work (517087) | more than 5 years ago | (#27369675)

The same way they do when they release through any other publisher - or did you seriously think the publisher eats the cost of the refund?

Re:DoS on developers' bank accounts (1, Insightful)

Anonymous Coward | more than 5 years ago | (#27369761)

Um, yes? Isn't that the risk that any publisher takes when they take on someone hence why they don't take on every man and his dog? In return they get the rights to sell the stuff.

Re:DoS on developers' bank accounts (0)

Anonymous Coward | more than 5 years ago | (#27370089)

If the publisher doesn't check what he's selling, what do you need the publisher for? If he does check what he's selling, shouldn't he eat the cost of a refund? After all, he does take the profit when nothing's wrong, doesn't he?

Re:DoS on developers' bank accounts (5, Informative)

fractoid (1076465) | more than 5 years ago | (#27370101)

Are you insane? O.o if I wholesale a shirt to K-Mart, they sell it and the customer brings it back, I'll refund them what they paid me. There's no way in hell they get their retail price (double or more the wholesale price) out of me though!

Re:DoS on developers' bank accounts (1, Informative)

Professor_UNIX (867045) | more than 5 years ago | (#27370439)

Releases through any other publisher are not refundable except for exchange for the exact same product (i.e. you got bad discs, you can take it back and get the same piece of software). What stops someone from buying the software and then getting a refund on it and pirating the software otherwise? The only store I ever remember allowing software returns for cash was called Microcenter and they stopped allowing open-box software returns years ago.

Re:Not to be an apologist... (1)

bostongraf (1216362) | more than 5 years ago | (#27369671)

But either way, Apple is still providing a service here that both the developers and the consumers are using.

However, the service that Apple is providing is based entirely on promoting their own product line.

The developers are also providing a service to Apple by creating applications that draw customers to the iPhone/iTouch product. Every comparison to any new phone on the market always comes down to "the interface is good. Maybe as good as the iPhone's. But nothing can compete with the AppStore." [paraphrase]

Go ahead and charge a steep commission, but don't kick the same people that are giving your product an edge.

Re:Not to be an apologist... (-1, Troll)

aliquis (678370) | more than 5 years ago | (#27369679)

Tss, Apple suck.

(I've got karma to burn.)

Re:Not to be an apologist... (1)

similar_name (1164087) | more than 5 years ago | (#27369877)

How does the cost of the developer magically disappear? Why should a developer have to pay back more than he was originally paid? I don't know how you justify keeping a commission on something that's returned.

Re:Not to be an apologist... (0, Flamebait)

Richard_at_work (517087) | more than 5 years ago | (#27370045)

Because actual resources were consumed by Apple on the behalf of the developer when an app was purchased - banking costs, accounting costs, bandwidth, storage et al. They don't magically get zeroed out when a refund is processed, they have already been consumed.

Why should Apple eat that cost? Its the developers app that caused the refund to happen...

Its all academic anyhow, since this entire story has been proven false - Apple do not get teh developer to pay the full 100% refund, so yes Apple are indeed eating the cost of the consumables.

Re:Not to be an apologist... (0)

Anonymous Coward | more than 5 years ago | (#27370047)

That's par for the course. Middlemen always take their cut. I wouldn't be surprised if Apple charged the developer a refund fee. Remember when the Internet was going to be the end of the middlemen? Fooled you again...

Re:Not to be an apologist... (0)

Anonymous Coward | more than 5 years ago | (#27370393)

Why do I get the feeling if this was a Microsoft article comments like this would be the complete opposite?

well, remember Layer Cake ... (0)

Anonymous Coward | more than 5 years ago | (#27369373)

if you don't take the piss, they'll keep coming back. if you do ... it'll catch up with you eventually.

Every time I see an article about Apple... (3, Insightful)

Nakor BlueRider (1504491) | more than 5 years ago | (#27369379)

...my opinion of them drops more and more. I think my opinion of them can't get worse, but they always manage to come up with some way. :\

I only hope that the devs are all quickly made aware of this and decide to do something to fix it, be that changing platforms, harassing Apple for a change, or whatever else works for them. There's no cause at all for devs to risk a loss of 30% of their initial charge per sale.

Re:Every time I see an article about Apple... (1, Interesting)

WankersRevenge (452399) | more than 5 years ago | (#27369493)

I love my mac book pro and as a first time OS X user, I am more than pleased with the entire experience. That being said, I would not buy any other apple product no matter what the price. Apple does some crazy shit that would Microsoft envious.

Re:Every time I see an article about Apple... (5, Informative)

malice (82026) | more than 5 years ago | (#27369611)

This is all fairly silly... Apple does not keep the 30%: [cnet.com]

Updated 4:00 p.m. - An Apple representative said the company's policy concerning refunds and developers is that when a refund is granted on a purchase made through the App Store, Apple returns the customer's money and debits the developer's account by 70 percent of the application price, or the revenue the developer had gained on the sale. The company does not charge the developer an additional 30 percent during the refund process, the representative said.

Re:Every time I see an article about Apple... (4, Insightful)

lastchance_000 (847415) | more than 5 years ago | (#27369777)

Yet, they put the language in there. "But we promise we won't use it!"

Most likely they won't, but then they should have written the agreement to reflect that, instead of making developers dependent on their benevolence.

Re:Every time I see an article about Apple... (1)

aliquis (678370) | more than 5 years ago | (#27369883)

Nice, thanks, someone messed up bad then.

Re:Every time I see an article about Apple... (3, Interesting)

tomhudson (43916) | more than 5 years ago | (#27369677)

I love my mac book pro and as a first time OS X user, I am more than pleased with the entire experience. That being said, I would not buy any other apple product no matter what the price. Apple does some crazy shit that would Microsoft envious.

Developing for the iPhone used to be fun. It used to be about doing things the right way. It used to be something that you could sink your teeth into when the mundane chores of programming for a living got you down. It was something cool and exciting; a way to spend your spare time on an endeavour you loved that was at the same time wholesome and worthwhile.

It's not anymore. It's about money and control and refunds and chargebacks, telling others what to do and doing what you're told. It's about who can distort reality the longest or get the fanbois to shout the loudest or mislead the most people into a walled-in garden in order to legitimize the "Cult of Stevie.". Individuals notwithstanding, Apple and the iPhone store as a whole has lost track of where it's going, and has instead become obsessed with process and mechanics, money and control.

Re:Every time I see an article about Apple... (0, Flamebait)

bsane (148894) | more than 5 years ago | (#27369767)

Yeah- those sons of bitches have changed everything in the last 12 months...

In the first 24 hours of the Appstore I didn't have to worry about reviews or competing products or anything! Too bad those days are gone.

Now people write apps hoping other people will download them and like them- thats a horrible reason to develop for the iPhone. I'd much rather write an open source perl 'program' that does something dumb and mundane that no one will ever want or care about, and keep it on sourceforge.

That way everyone will know I'm keeping it real- thats what matters to me.

Please develop Android apps instead (2, Informative)

xant (99438) | more than 5 years ago | (#27369861)

Since Android came out I've been cheerleading/fanboying for it. I own a G1, the 1.1 version of the OS is about to come out, and although there are many apps for it already it needs a lot more, and a lot of people who find the platform fun.

Android ought to be the platform you thought Apple used to be. No stupid rules, no Apple kowtowing, just write your code. If you don't like the way Android Market works (and it can't be as bad for developers as Apple's) then you can still publish your .apk file anywhere else you please online.

Re:Every time I see an article about Apple... (1)

kloffinger (837670) | more than 5 years ago | (#27370381)

correction: does make Microsoft envious

Re:Every time I see an article about Apple... (5, Insightful)

geoff2 (579628) | more than 5 years ago | (#27369747)

Every time I see an article about Apple which gets basic facts about the company's policies wrong, I get just a little more annoyed.

Seriously. There is no "90-day" refund policy. Read the iTunes Store terms and conditions [apple.com] -- no mention of a 90-day period. In fact, the only mention of refunds is that you can get a refund if they can't deliver the purchase to you; otherwise, as it clearly states, "no refunds are available."

Moreover, there are thousands of app store applications and developers. Is there a single one who has complained about this refund policy screwing them over?

Methinks overheated rhetoric like the one in this post and tomhudson's below about how developing for the iPhone used to be fun but is now "about money and control and refunds and chargebacks" is farcical.

Re:Every time I see an article about Apple... (3, Interesting)

makomk (752139) | more than 5 years ago | (#27369849)

No, there is currently no 90-day refund policy. TFA is about Apple making a change to the developer terms and conditions to allow them to add a 90-day refund policy, and to screw developers over in the fashion described. They're not doing it yet, but they're clearly at least thinking about it, and probably planning to do so.

Re:Every time I see an article about Apple... (1, Insightful)

Anonymous Coward | more than 5 years ago | (#27369793)

...my opinion of them drops more and more. I think my opinion of them can't get worse, but they always manage to come up with some way. :\

Yep. This happens to me too. My opinion of forum geeks drops every time I see some knee-jerk reaction about some company (whether Apple, MS, SUN, etc...) in forum comments...

In another Industry. (0)

Anonymous Coward | more than 5 years ago | (#27369383)

In my industry we call this double dipping.

I am not rich (0)

Anonymous Coward | more than 5 years ago | (#27369393)

that would suck for the makers of that Iamrich application.

http://www.iphonealley.com/news/039iamrich039-iphone-app-helps-you-achieve-%C3%BCber-snob-status-for-1000-removed

My first month of sales (5, Informative)

superid (46543) | more than 5 years ago | (#27369423)

I just got my sales reports for february (my first month) and I have one return. My app sells for $2.99 and I get $2.10 per sale. I was debited $2.10 not $2.99 on this statement so maybe this is not in effect.

Re:My first month of sales (1)

Nakor BlueRider (1504491) | more than 5 years ago | (#27369475)

It may just be one of those cases where they have it in writing so they have the right to do it if they choose to. All the same, I think it should be removed from the contract in the interest of fairness.

Re:My first month of sales (4, Informative)

peragrin (659227) | more than 5 years ago | (#27369511)

shh don't tell that to /.'ers. they don't know how businesses work or their expenses so they think that apple is evil.

What people really don't understand is that credit card companies double and sometimes triple dip.3% of that $2.99 went to the credit card company. or $.09 since it was a refund they still charge for the transaction. So now it is $.18 Currently Apple has $.89 that is disappearing. Now if there was an error in apples transmission to the credit card company that gets charged too(1 in 20 or so)., and that is just credit card charging fees.

Apple isn't keeping their share either that too gets refunded. however since slash-dotters aren't lawyers they can't read the legalese that states that.

Micropayments are doomed to failure as they will never be cost effective as the transaction charges are more expensive than the payments. Of course since users never se those charges they don't understand them.

Re:My first month of sales (0)

Anonymous Coward | more than 5 years ago | (#27369651)

they don't know how businesses work or their expenses so they think that apple is evil.

Evidently neither do you.

Apple is a business, but someone selling apps isn't?

A dev spends time and effort writing an app, which they can only (realisticly) sell through Apple, and Apple demands that they pay Apple if a user doesn't like their app.

If this were MS pulling the same BS, you'd be up in arms about it.

Re:My first month of sales (1)

fafaforza (248976) | more than 5 years ago | (#27369663)

And who says Apple didn't arrive at the 30% commission to include credit card fees? No one is going to be mailing in cash, so it was an easily predicted cost.

But the point is, if a clause is not going to be enforced, and you don't want people to get all sensitive about it, remove it from the contract.

Re:My first month of sales (1)

Dogtanian (588974) | more than 5 years ago | (#27369805)

Micropayments are doomed to failure as they will never be cost effective as the transaction charges are more expensive than the payments.

Perhaps you meant

Micropayments as currently implemented are doomed to failure as they will never be cost effective as the transaction charges are more expensive than the payments.

I see nothing wrong with the general principle of micropayments. Is there any reason that some company shouldn't in principle be able to run a micropayments service and still make enough money overall to make it worth their time?

Re:My first month of sales (1)

orkybash (1013349) | more than 5 years ago | (#27370211)

Take a look at services like Xbox Live. Micropayments are done in "xbox points" which you buy in bulk just for that reason. Of course, apps are priced such that you'll never use up all your points, but that's just a detail!

Great opportunity for playing dirty (0)

tpholland (968736) | more than 5 years ago | (#27369425)

  1. Buy competitor's app
  2. Return competitor's app
  3. Rinse and repeat
  4. Competitor loses patience
  5. Errr...???...Profit

Re:Great opportunity for playing dirty (1)

tomhudson (43916) | more than 5 years ago | (#27369617)

  1. Buy competitor's app
  2. Return competitor's app
  3. Rinse and repeat
  4. Competitor loses patience
  5. Errr...???...Profit

The Balminator wants to know if this policy will also apply to the iPhones themselves, and to iPods ... 90 days use, then get your money back ... gee, maybe Detroit should follow that model - it'll help them go broke quicker, since unlike Apple's monopoly on the iPhone, Detroit doesn't have a monopoly.

App Store refunds: Much ado about nothing (5, Informative)

Anonymous Coward | more than 5 years ago | (#27369437)

cnet already looked into this and debunked it two days ago: http://news.cnet.com/8301-13579_3-10205293-37.html?tag=mncol;title [cnet.com]

Re:App Store refunds: Much ado about nothing (0)

Anonymous Coward | more than 5 years ago | (#27369513)

And that's what separates sites like slashdot from *real* news outlets. Real news outlets actually look into the stories they report. (Did I just call cnet a real news outlet?)

Re:App Store refunds: Much ado about nothing (1)

the_womble (580291) | more than 5 years ago | (#27369661)

Where can I find one of these real news outlets you speak of?

There are very few examples of proper journalism left - its mostly rewrite what you got off the wire or the press release or the spin doctor.

Re:App Store refunds: Much ado about nothing (1)

lanswitch (705539) | more than 5 years ago | (#27369691)

Not only newssites, even slashdot commenters seem to mostly rewrite what you got off the wire or the press release or the spin doctor.

Re:App Store refunds: Much ado about nothing (4, Interesting)

MightyYar (622222) | more than 5 years ago | (#27369527)

As that C-Net article points out, anyone who has dealt with credit card processing companies recently would gladly take Apple's deal - even if they were charging you back 100%, which they are not doing currently. I shit you not, if you make "too much" money, the processing companies will hold your money for up to 6 months - just because they can justify it with their terms of service. The supposed reason is to limit their exposure to chargebacks, and your only recourse is to sue them and lose your merchant account.

At least, that's my personal experience... :)

Re:App Store refunds: Much ado about nothing (2, Interesting)

bastion_xx (233612) | more than 5 years ago | (#27369637)

From a risk perspective, the merchant's bank is right to do this (reserves). The bank is on the hook in the event the merchant defaults and cannot pay the refund from a successful chargeback.

What does stink is the heavy handed approach banks take to the reserves. There seem to very few classes of merchants that they lump people into for reserves. Make sure to at least get compound interest on the rolling reserve!

Re:App Store refunds: Much ado about nothing (3, Interesting)

MightyYar (622222) | more than 5 years ago | (#27369803)

I'd have no problem with them holding sufficient reserve to refund chargebacks based on the 3-year chargeback history, for example. Which, in my case would have been close to zero. Mysteriously, after the market crash they all of the sudden started holding 100% of the money after previously holding 0%. Soooo... first some phone calls, then some letters, then some poking from lawyers, and now a lawsuit. With a little luck, the money will be freed up slightly before it would have been if we'd just waited :)

Re:App Store refunds: Much ado about nothing (1, Troll)

tompaulco (629533) | more than 5 years ago | (#27370115)

I guess it depends on what kind of volume the merchant is doing. For my business, we do a paltry $7,000 a month in CC sales, however, we close batches daily, and settlement is usually 3-4 business days later. We have had only one attempted (and successful) chargeback in our 3 year history, and the chargeback was less than 1/10 of a typical days sales, and they simply deducted it from our settlement. No need to hold funds.
In our case the one chargeback was a woman who bought product in our store, walked out the door with it, and then lost it on her way home. Since she couldn't find it, she simply reversed the charges. Our Merchant Account sent a letter saying that we had to refute the charges in 3 days or they would accept the chargeback. Unfortunately, I did not receive this letter until after the 3 day period had expired. So they chargeback stuck. Later, the woman, a regular, came in and paid us back in cash after admitting it was her fault.

Re:App Store refunds: Much ado about nothing (1)

digitalchinky (650880) | more than 5 years ago | (#27370067)

I've never heard of a card processor doing that, sounds like you need to dump the one you have real quick. We are using HSBC, not exactly the most user friendly bunch, their documentation is crap, and setting up their CPI or API for the first time is a task I'm glad I don't ever have to do again, but locking you out of your own money, never happened.

Credit card companies do this. (5, Informative)

Anonymous Coward | more than 5 years ago | (#27369439)

not in defense of apple, only that they are all equally evil.

Apple always eats their young (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#27369455)

Apple has a tradition of screwing their partners.

The decided to stop doing business in the early 9o's with the small retailer to work with the super stores.

The allowed Mac clones and then would not renew the licenses for upgraded models.

They told all of the developers that they were responsible to rewrite every thing in OSX and Apple was not going to help provide transition information.

The latest is just one in a long line of Apple examples of arrogance toward their resellers/developers.

Re:Apple always eats their young (1)

e4g4 (533831) | more than 5 years ago | (#27370321)

They told all of the developers that they were responsible to rewrite every thing in OSX and Apple was not going to help provide transition information.

Not to pick nits, but what? The Classic environment stuck around for ~7 (!) years, the Carbon API for longer. Apple provided plenty of transition, and transition information.

The decided to stop doing newbusiness in the early 90's with the small retailer

Bold text mine, they did not terminate their existing agreements with small retailers (many of whom are still around). Yes, they changed their business strategy, and that sucks if you're interested in getting into the small mac shop business.

On the subject of Mac clones, yes - that sucks for the clone makers, although from Apple's perspective whoever decided it was a good idea to allow clones should have realized that it would have done the damage it did to Apple's business. Even back then Apple was still a hardware company, that made the vast majority of their money on hardware. Clones cut directly into their primary revenue stream. Economically good for the end user, I suppose, but in the long run it would have driven a stake into the heart of the entity providing the software that actually set the platform apart from the herd.

And as to this particular article - it has been demonstrated in other comments and on other sites that this claim is categorically false. Apple refunds their commission to the person requesting a refund, and the developer refunds their 70% - so guess who actually loses money in a refund situation? Apple. They eat the credit card processing fees.

Yeah, free pie (i mean software) to iPhone users! (1)

imrehg (1187617) | more than 5 years ago | (#27369457)

So how much was the commission on the I am Rich" [appscout.com] I guess he'd lose the most...

Come to think of it, it was discussed before, that most people don't use many of their apps after the first few days, maybe even first few hours.

So, let's say there's a game on your iPhone, what would be the expected total time to finish it and get bored with it? I bet less than 90 days. So you can basically have a free game: download, finish, refund. It's golden!

In the world of "proper" computers, when was the last time you could get a full refund for a software after 90 days? In digital downloads, I don't think it ever happened. Of course, most of the time the developer cannot be sure that the person didn't make a copy of the software and send back the original copy (that is controlled in the iPhone's little walled garden). But e.g. Steam would be similarly in charge of your software - and offer no such refund [steampowered.com] ...

So, if it's in the contract, well, not much to do about it. If you get bitten (more refunds than sales) think again next time how you sell your app or maybe how to make a better one that peopel actually wanna keep! If still make money, give thanks to the mighty Steve that he let you keep some, and the users don't exploit the possibilities handed to them... ;)

Re:Yeah, free pie (i mean software) to iPhone user (1)

evilbessie (873633) | more than 5 years ago | (#27369517)

A 7/14 day cooling off period would be nice of apple to offer, but I agree that 90 days is far too long, the system will be gamed by people.

What's new (0)

syousef (465911) | more than 5 years ago | (#27369495)

Apple always wants to have its cake and eat it too. Apparently now it's the height of turtleneck fashion and style to take money away from a vendor because a customer is unhappy and changes his or her mind. Apple arrogance. What's the bet I'm modded flamebait, but if it were any other company I'd be modded insightful. If Apple wants to licence and control content, and forces this reimbursement policy on it's devs, Apple should have some moral obligation to return their share of the money too. Makes me sick.

Apple Still Doesn't Get Development (1)

segedunum (883035) | more than 5 years ago | (#27369503)

They're still extremely cagey about letting just any old riff-raff develop for their platforms, and still not realising at all that encouraging developers to write for their platforms in any way that they can is more than compensated for by people buying their products because of the applications available and the installed base it brings.

Re:Apple Still Doesn't Get Development (1)

AnalPerfume (1356177) | more than 5 years ago | (#27369687)

Exclusivity creates profit.

The more you charge for designer hardware, the less people will buy them, but the more exclusive it'll be seen; which in turn fosters an opinion that your stuff genuinely IS worth the extra cash. People will pay that extra for the status it represents. It also allows you to make a bigger profit on each sale, specially when you control the retail outlets (either directly with your own stores, or indirectly by setting the rules for third party retailers).

The same logic applies to the apps they deign to allow in their store. If it's so hard as a developer to get accepted into the store, the assumption is that the store has a high mark to aim for and the developer in question has done well enough to produce such a high quality app that it's worth the money.

Also bear in mind the mindset of many Apple customers; they WANT to pay for stuff.....even if a similar product can be obtained for free. It helps differentiate them from users of "inferior" platforms.

The less choice you offer, the more exclusive it appears to be. If that means forcing all Apple device developers to use their own store, they control the rules.....who knows, <sarcasm>maybe in a years time the contract will be changed so you have to give Steve a blowjob to get your application even looked at</sarcasm>.

Everything Apple do is about creating a revenue stream they control. I'd love to see an online app store for jailbroken iPhones where Apple's restrictions don't apply. So iPhone users will have a choice of web browser or media player; you know.....the stuff Apple believe shouldn't be a choice for their users.

Re:Apple Still Doesn't Get Development (1)

zippthorne (748122) | more than 5 years ago | (#27370187)

In the absence of sufficient information, the price can be used as a metric for guessing quality. It better the hell not be your only metric, but the statement that "things that are free" are of lower quality than "things that require stuff in exchange" is not false or even often false.

The count of "things that are free" that are also better quality than "things that have price" is quite small. Software is one of the few areas where they exist at all, but let's be honest: the vast majority of software being offered "at no cost" is worthless crap or demos of worthless crap with a price.

Re:Apple Still Doesn't Get Development (1)

fractoid (1076465) | more than 5 years ago | (#27370199)

I wish I hadn't already posted, because you'd be getting a ++insightful.

Bad, but not as bad as Visa (5, Interesting)

Teppy (105859) | more than 5 years ago | (#27369523)

I run an online game [atitd.com] and "chargebacks" are really annoying. How it works is that if someone calls their credit card company and says "I don't recognize this charge", Visa immediately removes the charge and debits our account the $13.95 monthly fee, plus a $25 "chargeback fee". We then have the opportunity to provide documentation that they really did sign up for the game.

If Visa then determines that the charge was legitimate, we get the $13.95 back (but not the $25.) If they determine that the charge was not legitimate, then we get neither back, and are charged an additional $25.

The worst that's happened is that someone used a bunch of stolen credit cards to create dozens of accounts over several months, always being careful to use open proxy servers. So we ended up with $1800 in chargebacks, and no way to stop them!

What we ended up doing was explaining the situation to everyone in the community, and when this guy contacted any of his in-game friends ("hey it's me, just had to create this new character") they would tell us and we would shut the account down right away and reverse any charges, but what a PITA!

Eventually this guy moved on, but we never did find him. Some social engineering indicated that he was from playing from internet cafes in Romania, but that's as far as we got.

Re:Bad, but not as bad as Visa (3, Interesting)

Lord Duran (834815) | more than 5 years ago | (#27369587)

"If Visa then determines that the charge was legitimate, we get the $13.95 back (but not the $25.)" How the hell would this hold up in court? You legally prove the customer was an asshole and you did everything as legitimately as possible, kept all the records, anything, and still VISA takes money from you? It's not a small amount either, $11.05 per claim. All your competitors need to do is get up a bunch of enough people, or the same people again, say 5000, have them sign up and cancel the charge, and you get a $55,250 bill in the mail. I say sue Visa.

Re:Bad, but not as bad as Visa (5, Insightful)

Teppy (105859) | more than 5 years ago | (#27369725)

It would hold up in court because I agreed to this by contract, as do any merchants that accept Visa/Mastercard. Discover Card is totally fair though - they reverse the charge, but don't tack on fees, or have a punitive policy when the merchant contests the chargeback.

Actually, I should do my small part to use market pressure to combat this - give an extra in-game perk, or a token discount amount to anyone that pays by Discover Card. (Or Amex; not sure about the rules for that card.) With a game as small as ours it would be nothing more than a statement, but statements are important. Hmmm...

Re:Bad, but not as bad as Visa (1)

Bios_Hakr (68586) | more than 5 years ago | (#27370113)

Edit the ToS to include a "fradulent chargeback" fee. If the user issues a chargeback and it's later overturned, charge their card an additional $30.

Re:Bad, but not as bad as Visa (2, Insightful)

the_raptor (652941) | more than 5 years ago | (#27369899)

And then no CC company ever does business with you again. This is also why CC security is so shit; they aren't using their own money.

Re:Bad, but not as bad as Visa (1)

tomhudson (43916) | more than 5 years ago | (#27369631)

If the customer goes directly to YOU, it's not a "chargeback". What Apple is talking about is a refund, not a disputed credit charge. Completely different mechanisms, and different costs.

Re:Bad, but not as bad as Visa (1)

Mishotaki (957104) | more than 5 years ago | (#27369743)

Bad, but not as bad as Visa

I remember one time, i baught computer components from an US store (i'm Canadian) and the store called my place to make sure i was doing a legitimate transaction.... the fact that i only had a cellphone and no landline that i could acess made them cancel the transaction and refund me...

Visa's transaction statement was 2 transaction with the store... one paying them and one paying me... both transactions had currency exchange fees... so Visa tried to steal money from me for a transaction that the store deemed illegitimate... I had to call Visa and explain the situation for them to pay me back those fees...

Re:Bad, but not as bad as Visa (1)

darkmeridian (119044) | more than 5 years ago | (#27369965)

This is the reason why credit cards are so insecure. Banks are not adequately incentivized to prevent credit cards from being abused. Merchants eat the loss while the banks make money either way. I will bet you that credit cards will become much more secure if banks were legislatively forced to eat the cost of consumer fraud. I hate big government, but there is a market dysfunction here: there are only a few major credit card companies (Mastercard, Visa, American Express, and if you want to be generous, Discover).

Europeans have smart chips in their credit cards that make them impossible to duplicate. Meanwhile, in the United States, we have pieces of plastic with magnetic ribbons on them that can be faked by a twelve-year old with some spare time on his hands. We don't even have photos on the credit cards. Absolutely bizarre.

Re:Bad, but not as bad as Visa (1)

Rich0 (548339) | more than 5 years ago | (#27370059)

Additionally, Visa/MC have some anticompetitive provisions. If you issue cards under one of these labels you're not allowed to issue cards on any label other than the other one. So, a bank could issue a Visa and a MC card, but they couldn't issue a Visa and a Discover card.

I think that this control over the financial transaction market really is becoming a barrier to progress. It wouldn't be hard to design credit cards using RSA that would make fraud on the part of both the consumer and the merchant almost impossible. Just have the merchant perpare a transaction request and transmit it to the card. The card then displays the amount of the transaction and asks for a PIN (entered directly into the card via a keypad - not into some untrusted device). The card signs the transaction and gives it to the merchant, who submits it to the bank. You'd still have chargebacks over failure to deliver service, but not over stolen cards/etc. Double-charges or incorrect charges would be impossible - the card would issue a unique ID to every signoff and it could only be used once for the indicated amount. Recurring transactions could be handled with an appropriate transaction request, and the cardholder would have access to a bank website that lists all open authorizations for such charges that they could revoke at will.

It isn't hard to design stuff like this. The problem is that the people running the show do just fine under the status quo, so why would they want to change? They actually profit from stolen cards.

Re:Bad, but not as bad as Visa (1)

Paperweight (865007) | more than 5 years ago | (#27369987)

Do you get still chargebacks with Paypal? Does it depend on your company size?

Myth: RTFA (4, Informative)

codepunk (167897) | more than 5 years ago | (#27369537)

Read the bottom of the article, the wording has been in the contract since day one. In addition Apple charges back the 70% not 100% in the event
the customer is even able to return it.

Inner Fence (InfiniteSMS) wrong? (1, Insightful)

Richard_at_work (517087) | more than 5 years ago | (#27369541)

When the Infinite SMS debacle struck (Inner Fence made an app for 99c which used Googles API to send SMSes cost free, Google then removed the API and people are *still* moaning about it on the Google Groups SMS Labs page), Inner Fence said this:

Apple does not give app developers any way to perform refunds. Hopefully, at 99Â people will feel like our app paid for itself after only a few messages.

http://www.innerfence.com/google-shuts-down-infinite-sms

So, apparently Inner Fence are wrong? Lying? Or just plain incompetent?

Re:Inner Fence (InfiniteSMS) wrong? (0, Troll)

Antique Geekmeister (740220) | more than 5 years ago | (#27369605)

And would choosing which kind of fool they are affects their business plan..... how?

Re:Inner Fence (InfiniteSMS) wrong? (1)

fractoid (1076465) | more than 5 years ago | (#27370255)

Well, it lets us decide whether they're devious or just stupid...

Re:Inner Fence (InfiniteSMS) wrong? (1)

e4g4 (533831) | more than 5 years ago | (#27370405)

Apple does not give app developers any way to perform refunds.

App developers are not in charge of Apple's store. App developers cannot initiate refunds. Users, however, can complain to Apple to initiate a refund, which Apple will then allow or deny. So Inner Fence was not wrong - they don't run the App Store, so they don't initiate refunds.

Restocking fee (5, Funny)

Anonymous Coward | more than 5 years ago | (#27369555)

Duh! It's the restocking fee of course...to offset the cost of putting that icon back among the others at AppStore.

Perfect Business Model for Apple... (4, Funny)

fatp (1171151) | more than 5 years ago | (#27369573)

1) Make every Apple staff buy an iPhone
2) Make every Apple staff buy as much 3rd-party iPhone App as possible
3) Request refund
4) ???
5) Profit!

You people! (2, Insightful)

danwesnor (896499) | more than 5 years ago | (#27369659)

If people are returning 7 out of 10 purchases, you still break even. If your software is getting 7 of 10 returns, it's either horribly broken or doesn't do what you say it does, so you shouldn't be getting paid, anyway.

Apple declares: "OK, we're evil" (5, Funny)

David Gerard (12369) | more than 5 years ago | (#27369683)

After bricking unlocked iPhones, kicking applications off the iPhone store that might even slightly compete with iTunes in the far future, filing a wave of patents on basic well-known computer science and openly sodomising iPhone developers in the city square of Palo Alto, Apple Inc. today filed a Form 8-K with the Securities and Exchange Commission declaring that it was openly adopting Evil(tm) as a corporate policy [today.com] .

"Fuck it," said Steve Jobs to an audience of soul-mortgaged thralls, "we're evil. But our stuff is sooo good. You'll keep taking our abuse. You love it, you worm. Because our stuff is great. It's shiny and it's pretty and it's cool and it works. It's not like you'll go back to a Windows Mobile phone. Ha! Ha!"

Steve Ballmer of Microsoft was incensed at the news. "Our evil is better than anyone's evil! No-one sweats the details of evil like Microsoft! Where's your antitrust trial, you polo-necked bozo? We've worked hard on our evil! Our Zune's as evil as an iPod any day! I won't let my kids use a lesser evil! We're going to do an ad about that! I'll be in it! With Jerry Seinfeld! Beat that! Asshole."

"Of course, we're still not evil," said Sergey Brin of Google. "You can trust us on this. Every bit of data about you, your life and the house you live in is strictly a secret between you and our marketing department. But, hypothetically, if we were evil, it's not like you're going to use Windows Live Search. Ha! Ha! I'm sorry, that's my 'spreading good cheer' laugh. Really."

Re:Apple declares: "OK, we're evil" (1)

fractoid (1076465) | more than 5 years ago | (#27370265)

Actually, the idea that Apple sees itself as some kind of BDSM dungeonmaster and that Apple freaks love the punishment that's dished out to them... kinda makes sense when you think about it.

"It just crashed and took your day's work with it, added to that you have RSI because the mouse was designed by an idiot!"
"...yeah... but... it felt SO GOOOD!"

Sounds Normal (1)

nurb432 (527695) | more than 5 years ago | (#27369751)

If the sale is canceled, why should they get to keep the profit?

If that wasn't the case, just get all your friends to buy stuff and keep the 'bonus' when they return it..

Sounds like AIG :)

Re:Sounds Normal (1)

maxume (22995) | more than 5 years ago | (#27369769)

The implication in the summary (which, according to several posters above, is wrong) is that Apple is charging developers 100% of the App price for returns, which is 143% of the revenue that the developers get.

lets do the math (4, Informative)

v1 (525388) | more than 5 years ago | (#27369887)

from TFA:

"Let's say you sell a 99-cent app. You get 70 cents per sale. You sell 1,000 copies and make $700. Let's say your return rate is a whopping 3 percent (good God! Why are 3 percent of your customers returning the product?!). So you pay back $30; net $670.

and further...

Transaction fees for online credit card processing can run as high as 25 cents to 30 cents per transaction, plus a percentage of the amount. But consider the 99-cent application, the most predominant price used on the App Store.
A micropayment transaction (less than $10) processed by PayPal carries a 5-cent transaction fee plus 5 percent of the amount. Assume that Apple has negotiated a similar fee with its payment processors; it would therefore be charged roughly 10 cents on each 99-cent purchase, reducing its cut of that sale to 20 cents. If it were charged a similar amount for a refund, its cut would be down to 10 cents.

Obviously, Apple, with the biggest music store in the United States, processes an awful lot of small transactions and therefore probably gets some sort of attractive volume discount that's less than the example provided above. But that doesn't mean that it gets that service for free: processing transactions on the Internet costs money, whether you are Apple or Joe Developer.

Updated 4:00 p.m. - An Apple representative said the company's policy concerning refunds and developers is that when a refund is granted on a purchase made through the App Store, Apple returns the customer's money and debits the developer's account by 70 percent of the application price, or the revenue the developer had gained on the sale. The company does not charge the developer an additional 30 percent during the refund process, the representative said.

So it would appear that Apple is at least being as nice about this as all the other publishers, isn't creating any outrageous chargebacks, and has said this was their policy from day 1, two important things the submitter seems to have overlooked in their summary.

Any credit card purchase you make, if you take it back and get a refund, you get 100% of your money back. What happens to the 3-7% the credit card processor skims off the sale? The store doesn't get it back, the manufacturer doesn't cover the charge. The store loses that money, every time. Same thing here, Apple is just passing that small loss onto the developers. But I do see a difference, if you return an item to WalMart then WalMart (the store) eats the difference and Sony or whoever isn't affected. But with ITMS, Apple is providing the devs a service for that cut, whereas WalMart isn't providing Sony a service really. Apple believes that this tilts the burden of the loss to the devs. Also to be fair about it, the devs are chiefly responsible for the number of times their apps get returned. ;)

chargeback forwarding? (1)

v1 (525388) | more than 5 years ago | (#27369913)

it also occurs to me that you could view this as Apple issuing a chargeback the same as the credit card processors do. So apple gets a chargeback fee from their cc processors, and then issues an identical chargeback to the devs. Seeing as Apple is already having to pay for that chargeback they got, technically their chargeback to the devs should be larger, to cover the cost of the chargeback they are having to pay, plus the cost of the service rendered to the devs without profit. So I suppose in that respect, Apple is being generous about this?

Re:chargeback forwarding? (1)

tompaulco (629533) | more than 5 years ago | (#27370251)

Apple doesn't have to pay a chargeback fee for a return agreed between them and their purchaser. It is just a normal transaction rate, which for them is probably about 4% or less.

Re:chargeback forwarding? (1)

maxume (22995) | more than 5 years ago | (#27370253)

They are being pragmatic. There would be far less apps if they made developers pay for everything (which might be good for iPhone users, as the typical app might end up being higher quality, but Apple makes money on volume here).

Lame (0)

Anonymous Coward | more than 5 years ago | (#27369901)

Old and inaccurate. Bravo for putting this on the first page.

causes and reasons are irrelevant (1)

unity100 (970058) | more than 5 years ago | (#27370031)

with such a bullshitty draconian refund policy, developers wont risk their asses developing for your platform. brutal realities of business.

you either improve it, or fall behind android in regard to apps. your choice.

Man... this doesn't get any truer just because... (1)

Canis (9360) | more than 5 years ago | (#27370273)

...it's been reposted to more websites.

I've debunked it several times now, and got bored of doing so, and instead just posted an article [wooji-juice.com] to my company website about it (because my company does iPhone development, and therefore would be directly affected were this true).

If you're too lazy to click through, the Cliff's Notes version is:

  • There is no change to the contract clause. They made that bit up entirely.
  • Apple do not take back 100% of the purchase price as the article claimed - and I have the spreadsheets that prove it.
  • People will keep reposting this article anyway, for the same reason Egypt is awash with claims of 'foreign sources' sending killer SMS messages [yahoo.com]

Yaaay for capitalism! (1)

MrOctogon (865301) | more than 5 years ago | (#27370373)

So according to this, if I had a competitor I don't want around I could just buy their app a lot and keep getting refunds until I bleed them dry? Sounds good to me.

Editors need to update the story (2, Insightful)

greg_barton (5551) | more than 5 years ago | (#27370449)

This has apparently been debunked, so the story summary on the front page is not true. The editors need to update the summary.

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