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Apple agrees to $53m settlement in iPhone warranty case

Apple has reportedly reached a $53 million (£34.6m) settlement over its failure to adequately honour iPhone and iPod touch warranties.

The US settlement, published by Wired, will now be submitted to court. It sets up a multi-million pound settlement fund, which will be distributed to those burned by the Cupertino-based firm's questionable warranty policies.

Apple did not immediately respond to a request for comment.

The case dates back to 2010, when multiple cases were filed against Apple over its refusal to fix faulty iPhones and iPod touches that were still under warranty. Ultimately, the complaints were combined into the larger case currently sitting before a San Francisco court - a class-action lawsuit in US legal parlance. Apple recently agreed to pay up, but does not admit to any wrongdoing.

"Apple has agreed to enter into this settlement agreement to avoid the further expense, inconvenience, and distraction of burdensome litigation," according to the court filing.

Apple provides customers with a one-year standard warranty or a two-year extended warranty. That warranty is voided, however, if the Cupertino-based company detects "damage caused by accident, abuse, misuse, liquid spill or submersion, flood, fire, earthquake, or other external causes."

In order to determine whether a device malfunctioned because you dropped it in the toilet, for example, rather than encountered a problem with Apple's hardware, Apple has a "Liquid Submersion Indicator" on iPhones and iPod touches that turn pink if they are submerged in water.

The plaintiffs in the case took their devices, which were still under warranty, into Apple to be fixed. But Apple found that these indicators had turned pink and denied them any assistance. Trouble is, the indicators apparently turned pink even if they hadn't been submerged in water.

"External Liquid Submersion Indicators can be triggered by other types of moisture that should not cause damage in any event — such as a palm that becomes sweaty after a work-out, and other small amounts of moisture to which the devices would be exposed during ordinary, foreseeable use," according to the original complaint.

Apple isn't quite buying that argument, but it apparently doesn't want to spend any more of its cash on this fight. If the court approves the settlement, Apple has 15 days to deposit the money into the settlement fund. People affected by Apple's policies will be notified, and they can apply for reimbursement.

How much money people actually get depends upon how many customers sign on to receive a payout. The case covers the original iPhone, the iPhone 3G, and iPhone 3GS (pictured, top), as well as the first-, second-, and third-generation iPod touch, but class members cannot receive more than 200 per cent of the amount their gadget is worth. So, if you had a 16GB iPhone, which is worth $300 (£200) according to the filing, the most you could take home is $600 (£400). Again, however, if a large group of people sign up for a payout, that amount could dwindle significantly.

Lawyers will also be taking fees and expenses out of the $53 million.

Warranties have been a bit of a headache for Apple lately. Recently, Apple issued an apology to its Chinese customers for misunderstandings regarding its repair and warranty policy. Apple is also facing scrutiny over its warranty policy in Europe. Last month, EU Justice Commissioner Viviane Reding argued that Apple is still not adequately informing customers that they are entitled to two-year product warranties, and accused member states of lax enforcement.