• by Wendy Davis  @wendyndavis, February 26, 2013

Apple has agreed to settle a class-action lawsuit by providing at least $5 in iTunes credits to parents whose children ran up credit card charges by purchasing virtual currency for use in games they had downloaded.

If approved by U.S. District Court Judge Edward Davila in San Jose, Calif., the settlement will resolve a lawsuit initially filed two years ago by Phoenixville, Pa. resident Garen Meguerian. He alleged that his 8-year-old daughter ran up $200 by purchasing in-app currency for use in games like "Zombie Toxin" and "City Cash," which she downloaded for free from iTunes.

Meguerian alleged that iTunes required log-in credentials to download games, but then gave players a 15-minute window to purchase currency without reentering a password. Several other parents filed similar lawsuits, which were consolidated in front of Davila.

The settlement calls for Apple to provide $5 iTunes credits to all parents who say a child ran up bills for in-app purchases. Parents whose children ran up more than $5 in a 45-day period will be entitled to iTunes credits for that amount or, if the charges exceeded $30, cash refunds. The deal also calls for the lawyers who represented the parents to receive around $1.3 million.

Meguerian alleged in his complaint that Apple "entices" children by offering free apps that then offer to sell "irresistible game currency." The parents argued that Apple should have done more to inform people that the "free" games were supported by in-app purchases. They also argued that any contracts entered into by their minor children were voidable because of their age.

Davila will hold a hearing in the case on Friday, when he is expected to decide whether to grant the settlement preliminary approval.