Is Apple Really Charging Developers 100% of App Refunds? Not So Far.

Techcrunch ran one of their big, blazing headlines today reporting "Apple’s iPhone App Refund Policies Could Bankrupt Developers". They cited Apple's contract which allows for Apple to charge developers 100% of a refund, even though devs only get 70% of the payment to begin with. Under that model, developers would get hit for 30% extra each time an App Store purchase was refunded. Not nice, for certain. But apparently also not (yet?) the case.

TiPb contacted several developers to find out what was going on. While some were aware of the potential for a 100% refund charge back, none had experienced it. Uniformly, they reported very few refunds, and when they did occur, charge backs only for the same 70% cut Apple had originally passed along to them.

For now, at least, Apple is eating whatever processing, administration, and other charges that occur out of their own, 30% cut.

In general, all the developers we spoke with hadn't seen many returns and didn't seem to consider this a huge problem right now. This might be because the process of getting a refund is not easy to begin with. If that changes, as recently discussed on Twitter, it could become a greater concern.

As to Techcrunch's other charge, that a refunded app becomes unusable, we've been unable to find an occurrence of that in the real world. If you've had a refund on any apps, let us know if it goes dead, keeps working but won't upgrade, or stays the same.

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, ZEN and TECH, MacBreak Weekly. Cook, grappler, photon wrangler. Follow him on Twitter, App.net, Google+.

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There are 7 comments. Add yours.

Kappo says:

I don't see where this is a huge deal. Apple doesn't give refunds often and, if they do, it's likely to be a fault of the program rather than anything else. That's why they have the ability to assign up to 100% of the blame on the developer. If people start requesting refunds of your app en masse, perhaps you should spend less time worrying about Apple and more time wondering why all your customers feel swindled.

iphonemilk says:

Ummm i think the major common sense question we should be asking here is Why are Snotty Whiny customers asking for refunds on apps?
LOOK people, I've purchased MANY MANY apps, and some of them were HORRIBLE. But i did not once for one second demand a refund or even think of demanding one. You eat the cost of buying the bad app.. Do a little bit of research before you buy it.. WOW what a novel idea.. what an amazing concept! If it turns out that you don't like it? well to bad. Stop whining and crying all the time I'm getting sick of it.
Half of the App reviews on the Apps are all wrong first off, and caused by customers stupidity. Example of one customer not knowing how to do something when everyone ELSE can do it just fine.

william says:

Clearly, a developer should go bankrupt if a substantial number of users are demanding refunds! I don't know if Apple should keep the whole 30% on a refunded app, but they shouldn't have to eat the costs of distributing a terrible application. Just like expecting the postal service to eat the delivery and return costs of somebody's faulty product.
And BTW, why on earth shouldn't an app be deactivated if you GOT A REFUND? If you want a "return," it ain't yours anymore.

frog says:

I had to ask for a refund. An App simply wouldn't launch, and after about a day a few other reviews said exactly the same thing.
Apple responded to my email within 24 hours, apoligising, saying the amount had been refunded - and even throwing in a little bonus.
I'd never ask for a refund for a "bad" app, but this one wouldn't even load so it seemed fair enough. I must say in my dealings with Apple/iTunes, their customer service is excellent - they once "double" charged me for a song in iTunes, which I didn't even notice - sent me an emailing the next day apologising and gave me a $10 credit as goodwill.
To be honest, it's that sort of service which has kept me spending there. I'm 110% sure any other online music seller would not even reply to an email, much less take the positive action Apple do.

mystic says:

@frog
I've had exactly the same experience as you. No quibbling, no hassle. I once got an email from customer service which said they had noticed a problem with one of my song downloads, and that they were crediting my account and giving me two additional downloads for free. I had no idea what they were talking about!

aj says:

ok im an apple fanboy, i admit, but this could be their worst call ever and i believe this will be chnged or revoked...think about apps that let you read book on your iphone, like twilight, and coraline, etc. within 90 a person interested in reading can read a book in its entirety. so when your done with reading the book you can get your money back? so its almost like piriting books...and other apps, like games...beat the game and get your money back, easy in 90 days...95% of app users will do this...i promise on that...i think apple will change the amount of days, more like 2-4 days, not 90...thats ridiculous, or just abolish this policy.

Matt says:

I'm a developer that has released an app on the Google Android marketplace. The Android market lets users refund apps within 24 hours right from their phones. In fact, if you go to your list of downloaded apps and view the details of that app, right next to the "Open" button (to launch the app from that screen) there is the refund button.
When we first released we were seeing as high as 70% of users refunding our app, often within minutes or purchasing it. That number has since dropped down to about 40% but that is still very high (especially when you consider that iPhone developers are reporting little to no refunds?). Our app sells for $2.99.
If Apple implements a refund policy expect to see both developer and Apple revenue going way down. Even 24 hours will result in a huge number of refunds, 90 days will probably wipe out the market.
As someone else mentioned we also see people rating our app and saying things that make no sense (for example, people saying how great it is and then giving us 1 star, or claiming they had a problem downloading it [again, something that isn't the developers fault] and giving a low rating).
The iPhone Market seems like it has been doing great. It would be a huge mistake for Apple to follow in Google's footsteps and screw over its developers.