Court documents show that Apple has agreed to pay $53 million to settle a class action lawsuit filed by countless iPhone and iPod Touch owners who claim that the company failed to honor its own warranty. The consumer complaints all revolve around a tricky little strip of tape inside the phone known as the Liquid Contact Indicator (LCI) that's supposed to indicate whether or not the device has sustained water damage. If so, the tape would turn pink. So for a long time, if an Apple employee opened up a malfunctioning iPone or iPod at the Genius Bar and found pink tape, the warranty was immediately voided and the consumer invited to buy a new phone.
There's only one problem with this patented magic tape technique that the Geniuses used to determine which phones had been dropped in a toilet and which had simply stopped working. The tape didn't work. Wired's David Kravets, who broke the story about the settlement, explains that "the tape's maker, 3M, said humidity, and not water contact, could have caused the color to at least turn pink." In other words, Apple was punishing people who lived in humid climates. Arizonans were probably fine. Alabamans were certainly screwed.
Apple must've known that there was a problem for a while. A little over two years ago, the company announced that it would no longer rule out a replacement "if the customer disputes whether" the LCI had been triggered. As long as there was not corrosion present on the phone, Apple would allow for some leeway. It still refused to admit the system's shortcomings. "Note: LCI's are designed not to be activated by temperature or humidity that are within the product's operating requirements described by Apple," the company clarified in the new policy.
For many customers, this $53 million settlement serves as a suitable alternative to Apple coming clean. That money will be enough to compensate those in the class about $200, though it applies only to early iPhone models (original, 3G and 3Gs) and the first three generations of iPod Touches. If you have a newer device, you'll still need to be careful when you're texting in the restroom.