NEW JERSEY – Apple misrepresented and concealed performance problems from millions of customers, and the result is a settlement netting $3 million to New Jersey.
The total settlement of $113 million is spread between other states, according to Attorney General Gurbir S. Grewal.
The iPhone problems involved unexpected shutdowns, battery issues, and slowdowns caused by software debates. The State, advocating on behalf of customers, alleged that Apply misrepresented and concealed these issues, violating consumer protection laws.
In addition to the settlement with the 34 states, Apple also recently entered into a proposed settlement of class action litigation. Under that proposed settlement, Apple will pay out up to $500 million in consumer restitution.
“Apple’s treatment of iPhone consumers was rotten,” said Attorney General Grewal. “Not only did Apple try to conceal the iPhone’s shortcomings, but the company’s supposed fix for those defects created new problems that led consumers to shell out money for new iPhones. Today’s settlement should send a clear message that we will never tolerate such abuse of New Jersey consumers.”
According to the complaint, Apple pushed out software “fixes” that intentionally throttled performance of the iPhone Series 6, 7 and SE (Special Edition) devices in an effort to quietly resolve the slow-down issues. Because the unexplained slow-downs resulted in many consumers deciding that the only way to get improved performance was to purchase a newer-model iPhone from Apple, the alleged fraud resulted in more sales for Apple.
“This settlement resolves an investigation into corporate conduct that is deeply concerning on multiple levels,” said Division of Consumer Affairs Director Paul R. Rodríguez. “First, we allege that Apple failed to disclose a product defect. Then that it provided consumers what they claimed was a software ‘fix’ that actually limited the performance of their phones. Finally, that they delayed informing consumers until well after many had already purchased new phones to replace ones they believed must be obsolete. This settlement is not just about getting Apple to pay for its alleged duplicity, but just as importantly requires the company to abide by a variety of terms designed to ensure greater transparency moving forward.”
In addition to the financial payout, Apple will have to change their policies. They will have to clarify performance issues on their website. They will have to tell customers if an update will change the performance of an iPhone. They will have to inform customers about battery capacity and peak performance in the phone’s settings. And finally, employees will have to be aware of the changes and explain them to customers when appropriate.