Wired is reporting that Apple has agreed to a $53 million settlement in a class-action suit focusing on Apple's warranty practices regarding water damage in older iOS devices. The settlement agreement, which was leaked to Wired, has already been signed off on by Apple chief litigation counsel Noreen Krall and now awaits the official signatures of the remaining parties.
The lawsuit alleges that Apple improperly refused to honor warranty agreements for iPhones and iPod Touch devices which were seemingly damaged by water.
As a quick primer, iPhone and iPod Touch models come with Liquid Contact Indicators (LCI) which change color from white to pink or red when they comes into contact with water. Apple's warranty coverage, however, doesn't extent to water damage. As such, when an affected customer would bring in a damaged device with a red LCI, Apple refused to honor the warranty agreement by refusing to repair or replace it.
The problem with Apple's bright line rule, however, is that the the LCI was prone to change colors when exposed to humidity. Though Apple on its own website explains than an LCI is designed not to be triggered by changes in humidity and temperature, 3M, who makes the tape, said that such factors can sometimes cause the LCI to change color.
The devices encompassed in the lawsuit include the original iPhone, the iPhone 3G, the iPhone 3GS and the first three generations of the iPod touch. The ballpark estimate for payouts is about $200 per claim, but that figure could either rise or decline depending on how many affected users actually submit a claim. The type of device affected will also influence the extent of individual payouts.
The reason the last iPhone model included in the suit is the iPhone 3GS is because Apple in 2010 began requiring employees to look for other signs of water damage when a user brought in a device with a red LCI. Whereas employees under the previous protocol would void the warranty of an affected device out of hand, court documents posted by Wired indicate that Apple's liquid-damage policies for the iPhone and iPod touch were made less stringent in December 2009 and June 2010 respectively.
As part of the settlement agreement, Apple also agreed to set up a website where users can learn about the case and access all documents needed to either submit a claim via the web or by printing out a mailable form. Interestingly, the agreement requires that Apple make a published notice alerting the public to the settlement agreement in both the USA Today and Macworld magazine.
Naturally, Apple notes that it enters into the settlement agreement "without in any way acknowledging any fault, liability or wrongdoing of any kind."