Apple to pay $53 million in iPhone, iPod warranty suit

Over 150,000 customers will receive compensation after being denied warranty for the iPhone and iPod touch.
Written by Charlie Osborne, Contributing Writer
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Apple has agreed to pay $53 in order to settle a class-action suit connected to its iPhone and iPod Touch warranties.

According to a filing submitted to the U.S. District Court for the Northern District of California on Tuesday, the tech giant will pay up to $300 for customers who were denied warranty for their products. As reported by Bloomberg, the lawsuit against Apple alleged that the firm used flawed liquid submersion indicators to determine whether or not to grant a customer warranty on their iPhone or iPod Touch.

A Liquid Submersion Indicator (LSI) was installed by Apple on iPhone and iPod Touch products. If the tape made contact with water, the color would change. Apple said that this was proof enough of extensive water damage, although lawyers battling for consumers said that the change in color showed exposure to liquid, but not necessary damage, or that color changes simply showed that there was a problem in the device which allowed such exposure, and that was an issue the customer was potentially trying to have repaired in the first place.

Lawyers say that these indicators could also falsely suggest that one of Apple's mobile devices was abused simply through ordinary use, and the measure change based on nothing more than humidity. If an iPod or iPod Touch has been submerged in water then it is excluded from warranty protection, which means that consumers may have been denied repairs or replacements without reliable evidence of liquid damage and abuse.

Apple denies such claims and says that the liquid damage indicators are trustworthy. However, now the tech giant has agreed to settle in the U.S. for $53 million, customers who had warranty claims dismissed before December 31, 2009 on the basis of the liquid damage policy — and iPod Touches before June 2010 — are eligible for compensation. Over 150,000 customers are able to claim.

The settlement figure requires approval from the court.

Concerns over past warranty procedures are not the only reason Apple has been mentioned in connection to courtrooms. Apple CEO Tim Cook was recently required to appear before a U.S. Senate Subcommittee in order to explain the tech giant's tax system. Although Apple pays roughly $6 billion in tax to U.S. coffers (and expects to pay $7 billion next year), senators argued that this simply means the tech giant is one of America's "largest tax avoiders," based on the vast amounts of cash that are kept off U.S. soil because of high taxation rates.

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