Apple Sending Out Bonus Payments in $95M AppleCare Replacement Device Settlement

Two years ago, Apple agreed to pay $95 million to settle a lawsuit related to AppleCare+ — and now it appears that it’s about to make a second set of payments to impacted customers.

The class-action lawsuit was filed in 2016 but didn’t receive class-action certification until 2019. It alleged that Apple had violated the terms of its AppleCare Protection Plans by replacing customers’ faulty or damaged devices with refurbished units rather than new ones.

At issue was a line in Apple’s terms that said the replaced devices under the plan would be “equivalent to new in performance and reliability.”

Although Apple apparently felt the word “equivalent” should cover refurbished devices, the complaint maintained that “refurbished devices can never be the equivalent of new in performance and reliability” and insisted that a “new” device can only be one that has never been used or sold previously and consists of entirely new parts that have also never been used in other devices.

The complaint also notes that the word “refurbished” only appears once in the entire set of terms and conditions, although it does specifically say that Apple can “use new or refurbished parts” to repair a defect.

The class-action lawsuit sought compensation for those who bought AppleCare+ for an iPhone, iPad, or iPod, and demanded that Apple pay the cost difference between “devices that work like new and the inferior devices Apple provided class members.”

The Apple Plans purport to provide consumers with new devices, when in fact Apple sends consumers devices made of refurbished parts, failing to uphold its promise of iPhone, iPad, and iPhone replacements that are equivalent to new in performance and reliability.Replacement Device Class-Action Lawsuit

Lawyers for the plaintiffs argued that Apple is engaging in deliberately fraudulent behavior and illegally profiting by charging premium prices for AppleCare+ on the promise that customers will receive a brand-new device or brand-new parts in the event a repair or replacement is needed but are instead given “inferior” refurbished units in what the lawsuit essentially claims is a “bait-and-switch” scam.

Apple’s $95 Million Settlement

Anybody who has ever purchased or used an Apple Certified Refurbished Device will probably tell you that this particular case seems like a lot of legal hair-splitting. Apple’s Certified Refurbished Products are indistinguishable from new Apple devices, and they’re even more thoroughly tested to confirm that they’re in proper working order.

For instance, Apple can’t possibly do extensive quality assurance (QA) testing on the millions of iPhones and iPads that come off its production lines every day. Instead, like most manufacturers, the company likely has a QA program that checks every hundredth or thousandth unit on each line, assuming those are a representative sample of the entire batch.

It’s unclear what level of basic QA Apple does on its production lines, but a brand new iPhone you’re buying may have never even been turned on. Conversely, a Certified Refurbished iPhone (or any other product) has undergone an extremely thorough inspection before Apple puts it back on sale. It gets a new battery, no matter what, and often an entirely new casing if there are any signs of cosmetic damage like scratches. They also have the same warranty and eligibility for AppleCare+ coverage as a brand-new device.

Apple made these arguments to get the case dismissed before it received class-action certification while emphasizing that “equivalent to new” in the AppleCare terms is not the same thing as “new.” However, it failed to convince the judge and decided it was easier to settle out of court than continue the fight.

After four mediation sessions in 2021, Apple and the plaintiffs’ lawyers came to an agreement to pay a $95 million settlement, with $27 million of that going to administrative and legal fees and the remaining $68 million distributed to class members. Those are defined as anyone who purchased an AppleCare Protection Plan or AppleCare+ for an iPhone or iPad, either directly or through the iPhone Upgrade Program, on or after July 20, 2012, and received a remanufactured replacement iPhone or iPad on or before September 30, 2021.

When all was said and done, that worked out to about $14 per customer, and checks began going out not long after the final hearings concluded in early 2022.

However, in an interesting twist, the settlement is now sending out a second round of payments to distribute what’s left of the $68 million from those who didn’t cash their first check. As Michael Potuck reports at 9to5Mac, it seems that many folks either didn’t receive their $14 payment or couldn’t be bothered depositing it, leaving a sizeable chunk of money still to be distributed from the settlement fund. Since that money has to go out, the settlement administrator has decided to divvy up what’s left between those who actually did cash their first checks.

In Potuck’s case, he received $26.18, which he said was almost double the initial payment, suggesting that only a third of the people eligible for the initial settlement payments actually cashed their cheques.

Note that these additional payments are bonuses for those who already opted into the class-action lawsuit in early 2022 and redeemed their initial payments, either by cheque or electronic transfer. However, there appears to be some allowance for those who either missed the initial payment or forgot about it; the settlement FAQ indicates that requests for a physical check can be submitted until April 15, 2024.