Apple poised to pay $53 million over “water” damaged iPhone warranties

Fifty-three million dollars is the price Apple will likely have to pay to settle a class action lawsuit over its US iPhone and iPod touch warranty practices. A leaked settlement document (PDF) was uncovered by Wired, which describes payouts to customers who were unable to obtain iPhone or iPod touch repairs from Apple under the standard one-year (or extended two-year) warranty due to alleged liquid damage. The settlement has not yet been approved, though—it's set to be filed with the San Francisco federal court "in the coming weeks."

The customers covered in the class are those who were denied warranty repairs or replacements on certain iOS devices because of Apple's liquid damage policy; if a white liquid contact indicator (LCI) tape near the headphone jack or dock connector had turned pink or red due to moisture, Apple would refuse service. But, as noted by Wired, the maker of the tape (3M) has stated that the indicator can be triggered by humidity, not necessarily water itself, meaning the tape could potentially turn pink without contact with the liquid form of H₂0.

Affected devices include the original iPhone through the iPhone 3GS, as well as the first three generations of iPod touch (any iPhone sold on or before December 31, 2009, or any iPod touch sold on or before June 30, 2010). The proposed $53 million settlement will be used to make payments of up to $200 to affected customers, though the settlement document indicates that users might receive more depending on the number of claims.

The reason more modern iPhones and iPod touches are not covered under the proposed settlement is because Apple eventually changed its policies for both devices so that a warranty claim couldn't be denied solely based on a "triggered" LCI. (The company also introduced a new policy in mid-2009 that allowed affected iPhone users to buy a replacement iPhone for $199 instead of full price.)

The class action lawsuit in this case is actually a combination of lawsuits that were rolled into one, though it covers any buyer in the US who might have been denied warranty coverage due to the LCI. The lawsuits began in 2010 and extended into 2012, accusing Apple of improperly denying warranty coverage, breach of contract, common-law fraud, and unjust enrichment. Apple fought the suits at first, but it apparently decided to go the settlement route after the complaints continued to amass.

But Ars readers who were affected by the old liquid damage policy—and we know there are probably a few of you—won't be able to file a claim just yet. This settlement has only been proposed and has yet to be approved by a judge. That said, Apple has already signed the agreement, so it's only a matter of time before the settlement website will be up and more information will be available to those entitled to a payout.

As is usual for settlements like this, Apple has not admitted any wrongdoing. "Apple has agreed to enter into this Settlement Agreement to avoid the further expense, inconvenience, and distraction of burdensome litigation," reads the document.