Pressure on Apple Builds Over App Store Fraud

Excerpt from an article in

The New York Times

Friday, March 16, 2012

Pressure on Apple Builds Over App Store Fraud

By EVELYN M. RUSLI and BRIAN X. CHEN

In a little over an hour, Ryan Matthew Pierson racked up $437.71 in iTunes charges for virtual currency that he could use to buy guns, nightclubs and cars in iMobster, a popular iPhone game. One problem: Mr. Pierson, a technology writer in Texas, has never played iMobster.

“This was fraud,” said Mr. Pierson, recalling the November incident. “I woke up, checked my e-mail, and I could see these purchases happening in real time.”

Mr. Pierson raised the issue with Apple and his bank, and the problem was eventually resolved. But his experience is hardly unique, as reflected by hundreds of online complaints saying that Apple’s iTunes Store, and in particular its App Store, which the company portrays as the safest of shopping environments, is not so secure.

The complaints come from consumers like Mr. Pierson, who say that their accounts have been hijacked or that some apps are falsely advertised. And they come from creators of apps, who say they are having to deal with fraudulent purchases that drain their time and resources. Software makers also complain that competition in the App Store has become so brutal that many companies resort to artificially inflating their popularity rankings to grab attention.

It’s a change for Apple, which was once criticized for its micromanaging of the App Store. Now the problem is not too much control, but too little.

“This kind of thing just happens any time a platform is successful,” said David Edery, chief executive of Spry Fox, a small software company that sells games in the App Store. “People start flooding into it and it starts to get crazy.”

The App Store offers more than 600,000 applications for iPhones, iPads and iPod Touches, and has already generated billions in revenue for Apple and its developers. That makes it both the best deal going for software makers and consumers, and also a hulking target for those looking to manipulate the system and cheat people.

Apple declined a request for an interview, but said in a statement that it was working to enhance security. It advised customers whose payment information had been stolen to change their iTunes passwords and to contact their financial institutions.