- Analysis finds two per cent of 1,000 highest grossing App Store apps are scams
- These have tricked consumers out of $48 million, warns market research firm
- Apple profits from them because it takes up to 30 per cent commission on apps
- Last month tech giant revealed it rejected or removed one million malicious apps
Nearly two per cent of the 1,000 highest grossing apps on Apple’s App Store are scams, new analysis has found.
The offending apps have conned customers out of an estimated $48 million (£34 million), according to market research firm Appfigures, and Apple profits from them because it takes up to 30 per cent commission on App Store transactions.
Last month the US tech giant revealed it had rejected or removed more than one million malicious apps from its App Store and stopped more than $1.5 billion in potentially fraudulent transactions in 2020.
Scamming apps: The 18 apps listed above have tricked Apple customers out of almost $30 million (£21m), according to market research firm Appfigures
Apple’s £1.5 billion legal battle: What is the claim and why is it being brought?
Apple is facing a £1.5 billion legal battle over accusations it has ‘overcharged’ millions of UK customers for apps in its App Store.
The claim applies to the most popular apps on iPhones and iPads, such as Fortnite, YouTube and Tinder, which require payment at point of download, subscription payments, or allow for in-app purchases.
It does not apply to apps providing ‘physical goods or services that will be consumed outside of the app’.
These include Deliveroo and Uber, which are not required to use Apple’s payments system or pay Apple the disputed 30 per cent commission.
Affected app purchasers, on whose behalf the class action is brought, will not pay costs or fees to participate in the action, funded by Vannin Capital.
The action has been brought by Dr Rachael Kent, an expert in digital economy and a lecturer at King’s College, London who specialises in consumer welfare issues relating to smart mobile technology.
At King’s College, her research focuses on how consumers use apps and digital platforms, and the impact apps have on choice, spending and other aspects of consumers’ everyday lives.
Dr Kent is represented by Hausfeld & Co LLP, and Mark Hoskins QC, Jennifer MacLeod and Aaron Khan of Brick Court and Ronit Kreisberger QC of Monckton Chambers.
Dr Kent has also been advised on the claim by a consultative group with expertise and experience in group claims management, digital markets and consumer rights matters.
This group consists of Dame Elizabeth Gloster, formerly a judge in the Court of Appeal; James Walker, an adviser to the Scottish government on consumer protection and founder of Resolver, which helps customers resolve complaints with companies; and Kevin Jenkins, former CEO of Visa UK.
But the latest analysis, carried out by The Washington Post, suggests that scammers are still a major problem.
Several apps were found to be falsely presenting themselves, claiming to be linked to major brands such as Amazon and Samsung, while ‘fleeceware’ apps are also rife.
These use fake customer reviews to artificially inflate their App Store rankings and trick consumers into paying higher prices for a service which is usually offered free or cheaper elsewhere by an app lower in the rankings but with more legitimate customer reviews.
One QR code reader app, which is still on the App Store, cons customers into paying $4.99 a week for a service included in the iPhone camera app, according to the analysis.
A spokesman for Apple said: ‘We hold developers to high standards to keep the App Store a safe and trusted place for customers to download software, and we will always take action against apps that pose a harm to users.
‘Apple leads the industry with practices that put the safety of our customers first, and we’ll continue learning, evolving our practices and investing the necessary resources to make sure customers are presented with the very best experience.’
Unlike other mobile operating systems, the App Store has no competition and is the only way to get apps on to an iPhone or an iPad.
Some experts claim that because Apple has a monopoly over how consumers access apps there is little incentive for the company to spend money improving it.
Dr Rachael Kent, an expert in digital economy and a lecturer at King’s College, London, has brought a £1.5 billion legal action against Apple over claims it has broken UK competition law by ‘overcharging’ millions of people using its apps.
The California-based tech giant is alleged to have deliberately shut out competition and instead forced people to use its own payment system.
Apple’s policy of taking up to 30 per cent commission on such transactions is ‘unjustified’ and has generated ‘excessive’ profits, the claim argues.
Dr Kent said: ‘Thirteen years after its launch, it [the App Store] has become the only gateway for millions of consumers.
‘Apple guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified.
‘This is the behaviour of a monopolist and is unacceptable.’
Problem: Figures from the US tech giant, displayed here in a graphic from the firm, show the scale of fraud on the App Store. This is how Apple said it had protected its users during 2020
Damages of up to £1.5 billion are being sought – and could see as many as 19.6 million users in the UK eligible for compensation.
In response to the legal claim, Apple said: ‘We believe this lawsuit is meritless and welcome the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the App Store has delivered to the UK’s innovation economy.’
App developers have seen a boom in business due to the coronavirus pandemic, Apple revealed in March.
The tech giant, valued at more than two trillion dollars, says 2020 saw a 22 per cent boost in earnings compared to 2019 for developers. Apple did not give exact figures for either year.
As a result, more than 330,000 Britons are, at least in part, now employed with money from the App Store. This figure is up 10 per cent year-on-year, Apple claims.
Apple has tried to appease concerns over its commission fee within the App Store. Earlier this year, it halved the rate from 30 per cent to 15 per cent for smaller app developers.
But it has faced continued concerns over the anti-competitive nature of its App Store.
In April, the European Commission said Apple had ‘abused its dominant position’ within the distribution of music streaming apps.
Addressing the problem of scammers in an online post last month, Apple said: ‘Threats have been present since the first day the App Store launched on iPhone, and they’ve increased in both scale and sophistication in the years since.
‘Apple has likewise scaled its efforts to meet those threats, taking relentless steps forward to combat these risks to users and developers alike.’
The tech giant revealed that more than 180,000 new developers launched their first app on the App Store last year – and that there’s now around 1.8 million apps available to purchase.
Of the one million malicious apps that were rejected or removed, 215,000 were rejected for privacy violations, while 48,000 were rejected for containing hidden or undocumented features.
Another 150,000 were rejected for being spam, copycats or misleading to users, while 95,000 were removed for ‘fraudulent violations’.
As well as preventing $1.5 billion in fraudulent translations on the store, Apple said three million cards were prevented from being used to purchase stolen goods and services last year.
THE MAIN SUSPECT
Recently, I reached out to the most profitable company in the world to ask a series of basic questions. I wanted to understand: how is a single man making the entire Apple App Store review team look silly? Particularly now that Apple’s in the fight of its life, both in the courts and in Congress later today, to prove its App Store is a well-run system that keeps users safe instead of a monopoly that needs to be broken up.
That man’s name is Kosta Eleftheriou, and over the past few months, he’s made a convincing case that Apple is either uninterested or incompetent at stopping multimillion-dollar scams in its own App Store. He’s repeatedly found scam apps that prey on ordinary iPhone and iPad owners by luring them into a “free trial” of an app with seemingly thousands of fake 5-star reviews, only to charge them outrageous sums of money for a recurring subscription that many don’t understand how to cancel. “It’s a situation that most communities are blind to because of how Apple is essentially brainwashing people into believing the App Store is a trusted place,” he tells The Verge.
There’s a lot to unpack there: fake free trials, fake reviews, subscription awareness. We could write an entire story about each. Today, I’d like to focus on how one guy could find what Apple’s $64-billion-a-year App Store apparently cannot, because the answer is remarkable.
You simply look at the apps that are making the most money. Then, you find ones where the user reviews are suspicious and look for ridiculously high subscription prices.
That’s it. There’s no step four. Eleftheriou tells us this is how he started finding these scams, but you don’t need to be a coder to figure it out.
Heck, let’s try it together right now.
While Apple doesn’t share “top grossing” charts for the App Store any more (that seems to have died with the introduction of iOS 11 in 2017), companies like SensorTower still publicly share that data. All you have to do is pick an app category — say, Business — and click through the results.
Here’s “Call Recorder iCall,” the #26 top-grossing app in the Business category on the day I checked. As you can see below, “Charlier Brown” says he’s 100 percent satisfied and there’s a 3-day free trial, so what do we have to lose other than… $9.99 a week? Hooo boy.
Users of the app tend to complain they can’t figure out how to cancel that $520 a year subscription — and that the app often stops recording after just a handful of seconds. Yet somehow it’s got a 4.5-star rating on the App Store. And fake reviews clearly have something to do with it. Here are a few that app data firm SensorTower recently archived:
No real downside by Leena Hayes
The app is free and is very versatile. Obviously if you are more into working out it may not be the best (there are high lv’s so it can be difficult) but for what it offers you it’s fantastic
Best at home at I’ve found by Darren Gorham
Ive tried various at home apps to use in between the gym and none of them are as easy to use. The workouts are effective and I love the tracking it provides along with caloric counts and timing
No equipment needed by Rosalba Noble
If you want to feel better about yourself & not join a gym, highly recommend this app as it gets you motivated to bigger as in more reps – not weights. I think its great to use your own body weight to get that burning workout
Call Recorder iCall is clearly not an exercise app, but that doesn’t seem to have stopped these “reviewers” from trying.
Now, let’s try the #8 top-grossing app in the Utilities category: “Roku Remote Control – Roki,” which seems a little suspicious when you consider that Roku gives away its own official remote control app for free. Here are a few choice one-star reviews:
Taking my money by 804user
I paid for the $19.99, but I am still being charged each month and still have yet to hear back from any type of customer SERVICE….BEWARE!!!
Didn’t work by lawstudent1989
And now I can’t cancel my subscription in the app it and I’m worried it’s just a farce to get my credit card info.
Not impressed by FallenWish
So originally I had this app on my android and it was free but now we have to pay for it?Like we don’t already dole out 300 dollars or more for the tvs ♀️There is just no winning
And here’s the first screen you’ll see after downloading:
How could an app like this possibly have a 4.5-star rating in the App Store? Well, it wouldn’t if you actually averaged out each written review: Apple’s “4.5” counts every disembodied rating where someone punched in a number of stars, even if that was just to dismiss an annoying pop-up so they could try the app. As Eleftheriou tells me (pointing to his tweet, which I’ve embedded below), Roki would have had a rating of just 1.7 stars if you only counted reviews.
Here’s the kicker: Eleftheriou called out this app’s behavior two months ago, and yet it still exists in the App Store today. It’s not clear why, but it brings me to another important point. Even when people point out these shady apps, Apple doesn’t necessarily take action — and as Eleftheriou pointed out to me during our conversation, The Verge has some direct experience there.
Apple didn’t remove that app for two whole months, and won’t tell us the reasons for the delay. On the record, Apple would only provide this statement for our story:
“We designed and built the App Store to be a safe and trusted place for our users, and are constantly improving our processes to reduce fraud, malware and spam. To provide our users with the best experience, we regularly reject and remove apps, as well as fraudulent ratings and reviews, resulting in millions of removals every year. We intend to keep at this important work to ensure users can confidently download the apps they love and developers continue to make the App Store a great business opportunity.”
Star Gazer+ finally disappeared on April 8th, after Apple was approached by another journalist who publicly asked why it was taking so long. (It also happened to be the day Epic Games drew attention to some of these scams in a legal filing, though we’re not sure either is the true reason.) And while it appears that its publisher Dragon Game Studio has been booted off the App Store in the process, Apple appears to have overlooked its other publisher account for co-founder Jonas Johnsson, whose current claim to fame — no joke — is a “Ghost Detector+” with a $5/week recurring subscription fee.
Johnsson’s also got an $8/week horoscope app, and I’m sorry, this juxtaposition of angry reviews and a 4.5 score makes me laugh:
While it’s impossible for us to tell how many of the horoscope app’s 32,000 star-only ratings are fake, Eleftheriou says Apple should have no problem with that. “When you consider refund request rates, app usage, and other associated info that only Apple has, you could imagine a totally revamped discovery system that does away with the current crude star-rating system that hasn’t seen any innovation since Bezos pioneered it 20 years ago,” he suggests.
During my hunt for scam apps, I also notice that some reviewers of these shady apps complain that developers are asking them for money a second time, even though they already purchased full premium access, and Eleftheriou says it sadly appears to be a theme: “A lot of scammers go and buy successful apps from people, and all they need to do is take that skeleton, make minor modifications and make a lot of money,” he says.
To get a sense of just how much money these scams are bilking out of people, here are some comparisons Eleftheriou made when he spotted a VPN app scam last week, one that Apple was remarkably quick to shut down (after myself and a number of other journalists reached out to Apple about the painfully obvious scam):
But it’s only “quick” if you ignore that Apple didn’t stop the scammers for six whole months, even though they caught the exact same developer doing the exact same thing months before:
You would think Apple would keep these off the App Store, right? And if not then it would at least root them out, catch the scam artists, and keep them from doing it again. Yet that doesn’t seem to be happening. While Apple currently makes an estimated $64 billion a year from its App Store and tells The Verge it has computer automation, proprietary review tools, huge volumes of internal data, and a dedicated “Discovery Fraud team” of humans at its disposal, a single person on a laptop in his living room is finding egregious scams that Apple continues to host, and I was able to use his basic technique to do the same thing. As Apple faces down hearings in Congress and lawsuits in court, its argument that it needs to maintain total control over the iPhone app ecosystem to keep users safe doesn’t mesh with the obvious examples of grift that anyone can easily find.
Here’s another scam Eleftheriou spotted (I highly recommend this whole thread):
And another. (If you find some, too, Eleftheriou would love to hear from you at firstname.lastname@example.org.)
Eleftheriou tells me that Apple has removed over 100 apps due to his reports — and if you’re wondering whether his online crusade is personal, the answer is most definitely yes. He began digging for scams after his own app FlickType, a keyboard for Apple Watch, was overtaken by scam apps that didn’t work and charged ludicrous fees, yet prospered due to fake reviews. What’s more, he claims Apple gave his competitors (and scammers) a leg up by refusing to initially approve his app — because Apple was hoping to acquire it from him at a cheap price instead. Last month, he filed a lawsuit against Apple for two years of lost revenue and other damages. So he’s absolutely got skin in the game.
But I don’t think that lessens the impact of his Twitter threads about where, precisely, Apple’s App Store is falling down on the job. The fake review situation seems bad. So do the difficult-to-cancel recurring subscriptions. While I like to think most Verge readers will see the fine print and know how to cancel, and Apple’s been getting better about mandated warnings, the bewildered reviews on these apps are a sign that many iPhone and iPad users are still having trouble.
Eleftheriou suggests to me that the kind of users who might be most vulnerable to these scams are experiencing a kind of perfect storm: “They get virus pop-ups in Safari, they’re directed to the App Store and think the app is recommended by Apple, they download the app thinking it’ll help them, it’s got the perfect ratings, and they’re not savvy enough to know.”
He shares a chart with me (from AppFigures, see below) about how long it can take for vulnerable users to turn off recurring subscriptions: “Only half will have figured out how to cancel it two months later. The other half still hasn’t figured it out after 8 whole weekly billing cycles,” he says.
Situations like these make it harder than ever for Apple to justify its constant rhetoric about how the App Store is safe, secure, and defended, or that it’s necessary for Apple to be solely in charge, something that has already been in question for years due to the company’s arbitrary enforcement of its rules and recent App Store cash grabs.
And we’re starting to hear from Apple insiders, too, that the company’s claims about App Store security are overblown. Eric Friedman, the head of the company’s Fraud Engineering Algorithms and Risk (FEAR) team, will be testifying in next month’s Epic Games trial. In a recent deposition he spoke of the App Review team as “bringing a plastic butter knife to a gun fight” and “more like the pretty lady who greets you with a lei at the Hawaiian airport than the drug sniffing dog.” His team reportedly believed App Review’s job was incentivized to get apps “through the pipe” and “move people through” like TSA employees. “App Reviewers typically review between 50 to 100 apps per day,” reads part of Epic Games’ filing.
Other App Store executives deposed for the Epic Games trial admitted that they were aware of a number of the types of scams we’re discussing today, including ringtone apps that reportedly raked in hundreds of thousands of dollars a month despite users warning against them — start at page 170 here (PDF) for examples.
“Apple likes to tie the App Store together with the system level protections, and bundle them together as the reason why the distribution is secure, but really it’s the system-level protections that are doing all the work,” says Eleftheriou.
Meanwhile, Apple former senior director of worldwide marketing (and noted tech analyst) Michael Gartenberg praised Eleftheriou’s recent efforts to highlight scams, suggesting that the Apple ecosystem is “breaking at the seams.”
But the thing I’m stuck on is how the most profitable company in the world, a company that has long justified a 30-percent cut of the App Store’s billions because of its App Review efforts, a company with multiple enforcement teams and access to internal data, isn’t doing the simple task of auditing the App Store’s top-grossing apps for fraud.
But though Apple claims “the apps we offer are held to the highest standards for privacy, security, and content,” and that “moderators review worldwide App Store charts for quality and accuracy” every single day, it doesn’t seem to have taken this simple step.
Apple would not tell me why one man is continuing to find egregious apps that Apple’s fraud and app review teams are missing, or whether it goes back to inspect the App Store’s most lucrative apps for fraud. The company would not say how it protects customers against fake reviews, or whether any customers that fell for these scams will get refunds, or how it plans to combat scams in the future.
Apple did say generically that it does offer the ability to request refunds; that it does re-review apps against its App Store guidelines; and that it has improved its subscription processes both by 1) requiring app developers to clearly display what customers are getting into and how to cancel, and 2) prompting users to “manage” their subscription at the time they delete an app.
By the way: you know that app that John Gruber helped draw attention to in 2019, the one that reportedly charged $10 every week for wallpaper you could find free online? It’s still on the App Store. The app never got permanently removed.
It currently has a 4.1 rating, despite countless negative reviews, and SensorTower estimates the app still makes its developer $10,000 a month.
Correction: Background developer Tron Apps tells us Apple did briefly remove its wallpaper app in September 2019. That didn’t stop the negative reviews