Apple to Pay $53 Million to Resolve Suit Over Warranties

Photographer: Nelson Ching/Bloomberg

An Apple Inc. iPhone. Close

An Apple Inc. iPhone.

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Photographer: Nelson Ching/Bloomberg

An Apple Inc. iPhone.

Apple Inc (AAPL). agreed to pay $53 million to resolve a consumer class-action lawsuit alleging the company relied on faulty indicators showing that iPhones and iPods were exposed to water to deny customers’ warranty claims.

Consumers may be eligible for $300 depending on the device model they owned, according to documents filed in federal court in San Francisco. Lawyers for consumers say the liquid submersion indicators on iPhones and iPods could be triggered by moisture during ordinary use and falsely indicated devices had been damaged by liquid spills or submersion, problems that were excluded from coverage under Apple’s warranty.

Apple, based in Cupertino, California, denied the allegations and said the indicators were reliable, lawyers for consumers said in the filings. Customers whose warranty claims for iPhones were denied before Dec. 31, 2009, on the basis of Apple’s liquid damage policy and claims for iPod Touches that were denied before June 2010 are eligible for settlement funds. Attorneys can seek as much as 30 percent of the $53 million settlement fund for their fees and expenses. The settlement is subject to court approval.

The case is In Re Apple Iphone/Ipod Warranty Litigation, 10-01610, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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