Apple Settles Water Damage Lawsuit for $53M

Apple Inc. has agreed to pay out over $50 million to resolve a consumer class-action lawsuit related to warranties covering early versions of the iPhone (News - Alert) and iPod Touch. The lawsuit represented over 150,000 customers who claimed they were wrongfully denied a replacement and/or free repair of their device.

The problem started three years ago, when users began getting denied under their warranties. Basically, any device purchased from Apple (News - Alert) gets you a one-year warranty at no cost.

An extended warranty can be purchased for a small fee, which will cover various scenarios such as a broken screen, battery replacement, and even get you a new device depending on the damage. However, in order to be eligible under warranty, the device could not have been damaged through a spill or submersion in water.

Apple is able to test the water damage by checking a technology built into the iPhones and some iPods. The technology would change from white to pink or red if there were damage.

The plaintiffs of the case claim their devices had never had such water damage even though their indicators showed otherwise. To go even further, the plaintiffs also claimed that the indicators, which were developed by 3M (News - Alert) Company, were faulty and could change color depending on the humidity and/or moisture in the air.

After two years of back and forth, Apple has finally agreed to settle the lawsuit by paying out $53 million. The money will be placed in a fund to be shared between the 153,000 customers that were denied coverage due to water damage. Most of the affected consumers should expect to receive a payout of around $200.

Although it seems like a lot of money, according to the attorneys that were working on the case, the potential damages Apple faced could have been as low as $31.2 million or as high as $147 million.

The settlement is still subject to court approval.