FTC To Investigate In-App Purchase Practices

“Daddy can I download this game?  It’s free!”  For those of us with young children clever enough to download “free” iPhone games that feature costly “in-app” purchase upgrades, saying yes to that question often results in unexpected and unwelcome charges on our iTunes account.

Most parents in this position would agree with U.S. Rep. Edward Markey (D-MA), who recently wrote a letter to the Federal Trade Commission expressing concern that in-app purchases offered through the iPhone and Android platforms take advantage of children and inadvertently cost their parents far more than they intended to spend.   Rep. Markey requested the FTC to investigate whether games that offer in-app purchases are unfairly marketed towards kids.

The Web abounds with horror stories about children inadvertently spending thousands of dollars of their parents’ money on in-app purchases they didn’t know they were making.  Such stories led Markey to pen his letter to the FTC, asking it to review the issue and possibly educate consumers about the dangers of in-app purchases.   Upon submitting his letter, Markey stated: “I am disturbed by news that in-app purchases may be taking advantage of children’s lack of understanding when it comes to money and what it means to ‘buy’ an imaginary game piece on the Web. Companies shouldn’t be able to use Smurfs and snowflakes and zoos as online ATMs pulling money from the pockets of unsuspecting parents.”

Against this backdrop, the FTC has agreed to commence an investigation to determine whether Apple, Google, and app developers are engaging in deceptive marketing practices when they advertise games to kids.  Whether this is true remains to be seen, but one factor working against app sellers is how difficult it is to disable the in-app purchase function on the iPhone.  This cannot help but make one suspicious of Apple’s motives, in light of how easy and intuitive most of the other iPhone functions are to figure out.   To disable the in-app purchase feature, go to Settings > General > Restrictions.



Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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