It's not actually an error. It's correct.
See, there are two types of "It's" or uses of the apostrophe.
There's "It's wearing a hat" - (It is wearing a hat) and "Derp's hat looks funny." (The apostrophe is representing that what you're talking about belongs to something/one.)
The apostrophe can either represent a missing letter/word, or show ownership.
...Did I make that clear enough? xD;