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Monday, October 24, 2011, 03:16 pm PT (06:16 pm ET)

Settlement in iTunes Gift Card class action suit offers $3.25 per customer

A settlement has been reached in a class action lawsuit involving iTunes customers who purchased songs from the online music store for $1.29 with gift cards whose packaging promised songs for only $0.99.

Kurtzman Carson Consultants reports on its website that the Johnson v. Apple Inc. class action lawsuit, first filed by Gabriel Johnson in July, 2009, has been settled out of court, with members of the class eligible to receive $3.25 in iTunes Store credit.

The lawsuit alleged that Apple overcharged customers by advertising and distributing $0.99 gift cards before subsequently raising prices for certain songs to $1.29 in April 2009. Although Apple denied the allegations, both parties decided to settle to avoid the cost of litigation.

Problems arose when Apple ditched its iTunes-wide $0.99 model in April 2009, and began offering higher-quality tracks for $1.29. During the transition, Apple continued to advertise $0.99 songs on some gift card packaging. The new $1.29 pricing was later expanded to include new hits and popular tracks, along with the addition of a $0.69 model for less-popular songs.

In order to receive the credit, claimants must have purchased songs priced at $1.29 on or before May 10, 2010, with an iTunes gift card that said songs from the online store were $0.99.

Apple has also agreed not to oppose the Class Counsel's request for an award of attorney's fees and expenses of up to $2,117,500, which will be up for court approval in Feb., 2012. Counsel fees do not reduce the amount awarded to the class.