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iPhone App Refund Policies Could Cost Devs 230

Posted by Soulskill
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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iPhone App Refund Policies Could Cost Devs

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  • by tepples (727027) <tepples AT gmail DOT com> on Saturday March 28, 2009 @08:30AM (#27369417) Homepage Journal

    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?

  • by WankersRevenge (452399) on Saturday March 28, 2009 @08:49AM (#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.
  • by Teppy (105859) * on Saturday March 28, 2009 @08:55AM (#27369523) Homepage

    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.

  • by MightyYar (622222) on Saturday March 28, 2009 @08:56AM (#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... :)

  • by Lord Duran (834815) on Saturday March 28, 2009 @09:07AM (#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.
  • by bastion_xx (233612) on Saturday March 28, 2009 @09:18AM (#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!
  • 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.

  • by MightyYar (622222) on Saturday March 28, 2009 @09:59AM (#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 :)

  • by Jahf (21968) on Saturday March 28, 2009 @10:05AM (#27369829) Journal

    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.

  • by makomk (752139) on Saturday March 28, 2009 @10:10AM (#27369849) Journal
    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.
  • by arikol (728226) on Saturday March 28, 2009 @10:29AM (#27369963) Journal

    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.

  • by Animats (122034) on Saturday March 28, 2009 @12:30PM (#27370609) Homepage

    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.

  • by Anonymous Coward on Saturday March 28, 2009 @03:32PM (#27372219)

    Wow, lecturing me on needing to learn economics and finance, yet you try to make a piece of software purchased from a website to be equivalent to a piece of stock or a futures contract? That just ridiculous. It couldn't be more of an apples and oranges comparison. The only thing that might somehow justify your comparison is if this story wasn't actually false, which it is.

    If you knew even the simplest of basic economics or finance, you would realize that the underlying asset being sold is irrelevant. What matters is the role Apple, and the NYSE, take in the market. They are market makers. They provide a place for other people to sell their wares. And they charge a commission.

    For a simpler analogy, consider the owner of a shopping mall. The store owner needs to pay his rent, no matter how many returns he gets. Admittedly, this analogy is strained, as rent is not tied to the number of sales, except in the long term.

    Do you honestly believe that Apple's software store is more like the stock exchange than amazon.com? If you do, you're hopeless.

    Amazon has both retail and market making businesses. Indeed, they have many warehouses, where they house the wares they have bought from producers, and will hopefully sell to consumers at a profit. This constitutes the retail portion. They also allow other businesses the opportunity to sell directly to consumers via their web sites, such as amazon.com and half.com, arguably target.com, and so on. The latter is a market making business, and is indeed analogous to what the NYSE does for stock.

    The EBay brand, as another example, is purely a market maker. They do not sell any product of their own, but make money facilitating transactions. Yet again, another market maker that does not refund commissions unless they messed up their service. What is bought and sold on the market -- quality or crap, in particular -- is up to the buy and the seller.

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