In-app purchases come under European scrutiny

European authorities have been raising consumer concerns with the “app industry”, looking to avoid exploitative practices.

European Commissioner Neven Mimica

European Commissioner Neven Mimica

Specifically, the European Commission has met, over two days, with the likes of Google, Apple and the UK Office of Fair Trading to highlight issues over the exploitation of in-app purchases and whether the full costs are being transparently presented and children are being manipulated to make purchases.

Commissioner Neven Mimica, responsible for Consumer Policy (pictured), said:

“Consumers and in particular children need better protection against unexpected costs from in-app purchases. National enforcement authorities and the European Commission are discussing with industry how to address this issue which not only causes financial harm to consumers but can also put at stake the credibility of this very promising market. Coming up with concrete solutions as soon as possible will be a win-win for all.”

Points discussed at the meeting last week include:

  • Games advertised as “free” should not mislead consumers about the true costs involved;
  • Games should not contain direct exhortations to children to buy items in a game or to persuade an adult to buy items for them;
  • Consumers should be adequately informed about the payment arrangements and purchases should not be debited through default settings without consumers’ explicit consent;
  • Traders should provide an email address so that consumers can contact them in case of queries or complaints.

The full list of the participants were:

  • European Commission
  • Danish Consumer Ombudsman
  • Direction générale de la concurrence, de la consommation et de la répression des fraudes, France
  • Office of Fair Trading, UK
  • Autorità Garante della Concorrenza e del Mercato, Direzione Generale per la Tutela del Consumatore, Italy
  • Directorate-General Economic Inspection, Federal Public Service, Economy, SMEs, self-employed and Energy, Belgium
  • Department, State Consumer Rights Protection Authority of the Republic of Lithuania
  • Ministère de l’Économie, Direction du marché intérieur et de la consommation, Luxembourg
  • Apple
  • Google
  • The Interactive Software Federation of Europe

According to the official press statement:

Europe’s “app economy” is booming. It employs over 1 million people and is expected to be worth €63bn in the next five years. According to the external app analytics platform Distimo, around 80% of the revenue – estimated at over 10 billion EUR per year – of one supplier comes from purchases made by consumers from within an application by which consumers access special content or features, commonly called “in-app” purchases. For the app economy to develop its full potential and continue innovating, consumers need to trust the products. At present over 50% of the EU online games’ market consists of games advertised as “free”, although they often entail, sometimes costly, in-app purchases. Often consumers are not fully aware that they are spending money because their credit cards get charged by default. Children are particularly vulnerable to marketing of “free to download” games which are not “free to play”. Following complaints from all over Europe, the European Commission is meeting today and tomorrow (27 and 28 February) with national enforcement authorities and large tech companies in order to discuss these concerns. Industry will be asked to commit to providing solutions within a clear timeframe so as to ensure proper consumer protection for apps customers.

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