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ACCC targets developers in crackdown on in-app purchases

Tuesday, 10 September 2013 | By Yolanda Redrup

Australia’s competition watchdog is joining an international effort today targeting apps which mislead young children into making unauthorised in-app purchases – and developers are wary.


The Australian Competition and Consumer Commission has not ruled out enforcement action for these apps, as it joins more than 50 consumer protection agencies worldwide in the crackdown.


The ACCC wants improved disclosure about apps with in-app purchases, foreshadowing potential complications for app development businesses.


But Daniel Gorog, co-founder of Australian app development company Outware Mobile, told SmartCompany existing protections are enough.


“It’s crazy for the ACCC to think it can mandate platforms like iOS and android, it’s up to Apple and Google to make sure it is a safe environment.


The apps in question are generally able to be downloaded for free, but users can then make purchases inside the app for things like extra characters, levels or cheats.


Stories have emerged worldwide of parents being caught out after their children have spent more than $1000 on in-app purchases, sparking a class action lawsuit against Apple in the United States.


In response to complaints made by consumers, the ACCC is now looking into apps with in-app purchases and has started engaging with platform operators including Apple and Google to improve education and better protect consumers using these apps.


ACCC deputy chair Delia Rickard said in a statement consumers need to be aware ‘free’ may not actually be ‘free’.


“Games and apps in the ‘free’ area of an online store may be free to download but attract costs for in-app purchases. Some of these apps are marketed for children, who do not connect the game they are playing with spending their parent’s money in the real world,” she says.


Rickard told SmartCompany one common complaint from parents is kids getting frustrated when playing games and to get to the next level you have to pay a fee, or else spend days trying to overcome hurdle tasks to progress.


“I've been talking to some year five and six students today about using apps and in-app purchases and many didn't understand it was real money. Ina room of 40 to 50 students, at least 15 and probably more didn't know,” she says.


Rickard also says there needs to be much better disclosure so that it’s clear when purchasing an app from the free section of an app store that there will also be in-app purchases.


“There needs to be disclosures about the cheapest to the most expensive ways to use the app and how important those purchases are to playing the game.


“We're also looking at advertisements in apps targetting children. There are quite a number of concerning features,” she says.


Apple apps disclose in-app purchases, but often users need to scroll down to see the maximum purchase price and whether or not they need to make purchases to progress in the game.


Rickard says enforcement will be an option if disclosure isn’t improved.


In March 2011, Apple had received enough complaints about the in-app purchases it implemented parental controls.


Parents are currently able to block in-app purchases and if this isn’t turned off, a password must be entered before making an in-app purchase.


Rickard says in her experience most parents aren't aware of the controls until they are whacked with a big bill, but it's these protections Daniel Gorog says are sufficient.


“All of the security issues, even in terms of kids posting on Facebook and Instagram, are up to the parents to make sure the kids understand what they’re doing when they’re posting or spending money,” he says.


Gorog says he has children who like to download games and make in-app purchases, but says Apple does a “good job” in allowing parents to control how much kids spend.


“These apps have really expanded the market, and there is a lot less risk of buying a ‘free’ game. Apple has done a good job in controlling that, it’s easy to turn on parental restrictions so you have to approve purchases.


“And on the other side, 10 to 15 years ago parents had to spend $50 to $100 on Nintendo games, but now most apps are available for free and it’s kind of like a ‘try before you buy’ model,” he says.