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iPhone App Refund Policies Could Cost Devs
Posted by
Soulskill
on Sat Mar 28, 2009 07:17 AM
from the money-for-nothin dept.
from the money-for-nothin dept.
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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Apple Refusing Any BitTorrent Related Apps? 296 comments
jamie pointed out what appears to be an unfortunate policy for Apple's app store that is refusing anything to do with BitTorrent. The example is a remote control app that allows a user to interface with their Transmission BitTorrent client. This certainly isn't the first complaint over app store policy. Issues from the return policy to the "objectionable content" of Nine Inch Nails have some developers concerned over what Apple is doing to the market. Of course, many are quick to remind that it is Apple's store and they are free to do whatever they want with it.
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Not to be an apologist... (Score:4, Insightful)
Re:Not to be an apologist... (Score:4, Informative)
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.
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Re:Not to be an apologist... (Score:5, Informative)
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.
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Re:Not to be an apologist... (Score:5, Interesting)
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.
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Re:Not to be an apologist... (Score:5, Insightful)
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Re:Not to be an apologist... (Score:5, Insightful)
idk why this is modded funny. The biggest problem with open platforms is the huge quantity of junk. By setting a bar (which, honestly, is fairly low) they help eliminate some of the crap. This just refines the process.
Better that they don't have the good apps buried and not making enough sales.
I don't really like apple much at all but they built the platform. If you want to develop for it AND use their app store AND use their billing/payment system to earn yourself money...well you play by their rules or go to another platform. It still kinda sucks, but it's their game so their rules.
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Re:Not to be an apologist... (Score:4, Insightful)
I'd say that's backwards. Apple's conditions are a given...your choice is whether you want to do business with them or not.
(anyhow, the AND operator is commutative, so order is irrelevant. Must satisfy all criteria for TRUE)
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Re: (Score:3, Informative)
Um, why? Because people are satisfied with good apps and want to continue using them? And they are unsatisfied with poor apps and have no reason for them to be on their phone?
What's more likely is some people buy an app, 'back it up', return it for a refund, and find some hack or backdoor that permits them to still use the app.
How is this at all likely? If you can afford a $200 phone + $70-$90/month contract, why would yo
Re:Not to be an apologist... (Score:4, Insightful)
Which makes it sound a bit more reasonable.
How is holding developers to a standard above what is required of NASA, "more reasonable"?
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Re: (Score:3, Interesting)
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... (Score:5, Informative)
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.
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DoS on developers' bank accounts (Score:5, Interesting)
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?
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Re:DoS on developers' bank accounts (Score:5, Informative)
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Re: (Score:3, Insightful)
Your post just shows how much of a reality-denying fanboy you are. Try some intellectual honesty here. Can you name any other mass-market product that is sold that works the same way? I buy a shirt from target, then take it back because it's defective. They do not then charge the manufacturer full retail for the defective product.
I'm not surprised that the story would be proven false, because it would be total insanity if it were true.
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Every time I see an article about Apple... (Score:3, Insightful)
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... (Score:5, Insightful)
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.
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Re: (Score:3, Interesting)
Re:Every time I see an article about Apple... (Score:4, Funny)
Actually, I agre 100% with you - the article is fud. Read further.
You mean this one? http://apple.slashdot.org/comments.pl?sid=1178961&cid=27369677 [slashdot.org]
s/bsd/iphone/gmi; FTW:
Source: http://uncyclopedia.wikia.com/wiki/BSD_is_Dying [wikia.com]
I guess I should have put the <sarcasm> or <crymeariver> tags around it ... because I agree 100% with you that this whole article was a bunch of disinformation. It should be bleedingly obvious that (1) the story itself is highly inaccurate - these terms were in the original dev agreement, so this is not "news", and further, that apple has said that it doesn't apply it that rigorously (probably saving it only as a stick for when some dev. really abuses users, eg: putting out spamware, spyware, or malware). But who sticks to either common sense or actual verification when it's so easy to go "OMG LOOK WE'RE BEING FUX0RED! It's just the nature of the beast :-)
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Re:Every time I see an article about Apple... (Score:5, Informative)
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.
Parent
Re:Every time I see an article about Apple... (Score:5, Insightful)
Most likely they won't, but then they should have written the agreement to reflect that, instead of making developers dependent on their benevolence.
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Re: (Score:3, Interesting)
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
Please develop Android apps instead (Score:3, Informative)
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
Re: (Score:3)
All of which misses the point; the OP wanted a fun platform to develop on, not a huge installed base. Making a platform fun to develop on is how you get apps; apps are how you get users. iPhone's perceived sexiness will wear off, and be replaced by people who need functionality, and Android can be there for them.
My first month of sales (Score:5, Informative)
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 (Score:5, Informative)
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.
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Re:My first month of sales (Score:5, Informative)
Same here. Feb was my first month, selling for $1.99, one return. I was debited $1.40, the same that I am credited for a sale.
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App Store refunds: Much ado about nothing (Score:5, Informative)
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 (Score:5, Interesting)
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... :)
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Re: (Score:3, Interesting)
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 (Score:4, Interesting)
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 :)
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Re:card processor holds - get a real bank (Score:4, Interesting)
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.
You need a merchant account with a real bank. This is more work to set up, but your merchant bank account doesn't have to be controlled by the card processing service. When I did this, I used Bank of America. There are monthly charges, and you may have to keep a deposit (a CD, for example) in the bank as security. But the money goes into your account the day after the card is charged.
People in the "adult" industry have much tougher banking problems, because most of the big banks won't take their business. The terms from the "adult" credit card providers are much tougher, and many of them are ripoff outfits. (I once got a heated twenty minute lecture on this subject from a San Francisco bondage model and web site operator; she'd lost hundreds of thousands of dollars through troubles with an offshore "adult" credit card processor.) In that area, you do see multi-month holdbacks.
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Re:card processor holds - get a real bank (Score:5, Funny)
I once got a heated twenty minute lecture on this subject from a San Francisco bondage model
In other words, she tied you up in conversation?
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Credit card companies do this. (Score:5, Informative)
Apple Still Doesn't Get Development (Score:2)
Bad, but not as bad as Visa (Score:5, Interesting)
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: (Score:3, Interesting)
Re:Bad, but not as bad as Visa (Score:5, Insightful)
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...
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Re: (Score:3, Insightful)
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.
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Myth: RTFA (Score:5, Informative)
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? (Score:2, Insightful)
http://www.innerfence.com/google-shuts-down-infinite-sms
So, apparently Inner Fence are wrong? Lying? Or
Restocking fee (Score:5, Funny)
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... (Score:4, Funny)
2) Make every Apple staff buy as much 3rd-party iPhone App as possible
3) Request refund
4) ???
5) Profit!
You people! (Score:2, Insightful)
Apple declares: "OK, we're evil" (Score:5, Funny)
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."
lets do the math (Score:5, Informative)
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. ;)
Editors need to update the story (Score:3, Insightful)
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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