Apple Criticized by Korean Game Developers for its App Store Refund Policy

It took me a while to figure out what the big deal was. It’s not that people buy a $1.99 game, then get a refund and keep playing.It’s that people buy $100 in in-game “currency” using an in-app purchase, then get a refund, and keep the $100 of in-game “currency”. Then do this again. And again. And again.

Oh, you want to have the best fort in Clash of Clans? $100 in in-game gold, and you can do it quickly! Then get a refund on that in-game gold. Want to get good Pokemon faster? $100 in in-game gold and you can lure more Pokemon to you (for a long time.) Then get a refund on that in-game gold.

It took me a while to figure out what the big deal was.

It’s not that people buy a $1.99 game, then get a refund and keep playing.

It’s that people buy $100 in in-game “currency” using an in-app purchase, then get a refund, and keep the $100 of in-game “currency”. Then do this again. And again. And again.

Oh, you want to have the best fort in Clash of Clans? $100 in in-game gold, and you can do it quickly! Then get a refund on that in-game gold. Want to get good Pokemon faster? $100 in in-game gold and you can lure more Pokemon to you (for a long time.) Then get a refund on that in-game gold.

Not quite true. In clash of clans, if you request a refund in $100 worth of gems, the game takes the gems spent from you and you end up with thousands of gems in debt. You can still earn gems the normal way but it goes to offset that negative gem count.

Don’t know how clash of clans can do this but Koreans can’t figure out what the refund was for…

So… Commenters, we don’t need to be specifying “Korean developers” or calling them out by their nationality. This is a problem to *ALL* nationality of developers, it just happens that this article was in a Korean newspaper, so the developers they interviewed are Korean. Saying things like “These Korean developers whining about…” or “I wish these Korean companies would…” is unnecessarily adding nationality (and by proxy race) in to a complaint. Would you have made the same comment if the developers had been from California? Or Texas? Would you have specified “These Californian developers…” or “I wish these Texan companies…”?If not, then leave “Korean” off the description you post. Their “Koreanness” has nothing to do with the issue.

I hate in app purchases. I disable them from my settings.So pretty simple. Get rid of in app purchases. Than they wouldn’t have an issue tracking down people who ask for refund. One time fee payment for full game.

A non issue really. The developer has access to the receipt for each purchase and can check if it is still valid at any point in time.
They just need to keep track of the receipts, basic in-app programming ffs.

To be consistent Apple should have the same policy for their stores – so I can buy an iPhone/MacBook then call to request a refund without returning it. I’m sure there’ll only be a “small” number of people abusing it 😉

And what exactly are people “stealing” by “returning” 100 gold coins in an app – a couple bytes of database space?

I operate my own small business, a small hardware device with an online system connected – getting in on the “smart home” craze. Manufacturing is outsourced, so we don’t have to deal with manufacturing shrink, we just pay a per-unit contracted cost. The online service, as with any of these games, is practically zero cost-per-unit. If someone cancels a service, or asks for a refund (which we always offer). Yes, hardware space and bandwidth cost money, but there is no “direct cost” per-user.

Hardware-wise, in the past month, we’ve had $2388 which I’d classify as shrink at retail price, $912 at cost price. That includes:

– 1 unit damaged in warehouse
– 3 units lost by couriers shipping to customer
– 4 “change of mind” hardware returns that couldn’t be re-sold
– 1 unit that was bought via PayPal with a stolen credit card (we had to swallow the cost)
– 3 units that were returned as being faulty, which we determined was fraudulent – 1 had a smashed screen which couldn’t have happened during qa/shipping (impact mark), one which was obviously dropped and cracked but otherwise seemed to work fine, and 1 which was returned because apparently only the accessories were in the box, not the unit itself (even though we could see the unit was online, and connected to our service – not for long though!)

At cost price, for us that was around 0.9% shrink vs revenue, and around 1.4% vs per-item profit margins (not taking into account operating costs here). That’s something we have to budget for – we *know* it’s going to happen, and we take that into account. 100% of our shrink costs come from hardware, not software. Out of that, only a third of shrink was down to “fraud”.

Saying shrink can’t happen with a digital product is silly. Of course it’s going to happen. If you’re dealing with people, at some point you’re going to deal with fraud. Fact of life. The only difference is the physical cost behind it doesn’t scale the same way as with physical products.

Here’s two examples:

1. Company A sells a video streaming service for $10/month. Someone purchases a subscription uses a stolen credit card, and watches 50 films. The credit card company (rightfully) does a chargeback 14 days later, and the company cancels the service. A movie averages at 1.5GB, using 75GB bandwidth. They pay AWS $0.06/GB for bandwidth, which equates to $4.50. They also have to pay the rights holders $0.10 per viewing as part of their agreement. That’s $5, meaning that the total cost of the fraud is $9.50 – that’s $9.50 worth of shrink.

2. Company B offers a mobile video game for free on the App Store, and sells packs of “100 gold coins” for $5. When a user buys coins, they can use them to buy items in the store – the transaction is purely in the game, and the only result of buying the coins is a database entry to tell the game “hey, user X bought 100 coins”. Somebody buys 100 packs of coins for $500, buying all sorts of virtual items for their character, again, all database entries. The user claims their child accidentally bought the coins, and Apple refunds the $500. Company B hasn’t lost money, other than perhaps a couple of cent in bandwidth costs. Shrink is effectively 0.

That’s why I don’t understand them chasing so much – unless there is a physical per-unit cost behind it, it’s really not worth it. So what if someone buys a game or coins and returns them, they’ve lost a sale, sure, but they haven’t lost money.

you work for company A and i’m another customer. i don’t give a flying f*** if Fred next door can or can’t watch the latest Star Wars movie because of his fraudulent dealings with you. it literally has no material affect on the outside world.

you work for company B and i’m a customer on the same server as Fred. While you haven’t lost money, what you’ve done is enabled Fred to gain an unfair advantage over me and many others who have not bought the coins and got the stuff for free. of course, we don’t know that he hasn’t paid for them – perhaps he’s just a mr moneybags. but word gets out, the big spenders get upset that people competing with them are doing so by fraud and a ********* goes down on the game’s message boards. shrink isn’t measurable in terms of lost sales – yet – but is high in terms of lost reputation and goodwill. it could well have a material effect an order of magnitude higher than company A’s issues going forward.

comparing a video streaming service which serves one end user at a time, to a MMO game where the actions of one gamer affect the others is silly.

But you can’t *not* have a refund policy. I have, myself, gotten a refund for a game, when the game stopped working after upgrading from iOS 6 to iOS 7. The app was still installed and could still run (well, as far as it ever did after upgrading), but couldn’t be updated or re-downloaded.IMO, the amount of money they’re going to spend chasing down and suing the small % of customers who abuse it isn’t worth it. All businesses have to deal with a small % of fraud – how many retail places have had TVs returned as faulty when a new one comes out, or people had “left” their laptop in the trunk of their stolen car, or had their iPhone suddenly develop an intermittent fault just after a small scratch appears on the screen.

It’s a cost of doing business.

But you can’t *not* have a refund policy.
It’s a cost of doing business.

Very true. I wish these Korean companies would get a life and wake up. They are probably losing far more money from employee theft and laziness than a few app users.

Every business has shrink built into their monthly costs. Shrink is everything from stuff people return that they cannot get credit for, employee theft, customer theft, stuff that gets broken on the floor, etc. You have to expect these things to occur and build it into your costs.

I always assumed that Apple was able to remotely delete refunded apps.