In a statement dated 12 April 2013 the UK consumer protection authority, the Office of Fair Trading (“OFT”), has announced it is to investigate marketing practices used in children’s mobile games and applications which charge for additional content. These so-called ‘freemium’ applications are usually available free of charge or else for a nominal fee; however the product is then moneterised by allowing users to make ‘in-game’ purchases which grant access to additional features such as new content, virtual goods or virtual currency.
The OFT’s announcement follows a series of well-publicised cases in which children have used their parent’s mobile user account, without the parent’s knowledge, to make in-game purchases (which, for example, can range from a few pence to £70 or more) resulting in very large bills. In one reported case a five-year-old child made numerous in-game purchases of £69.99 over a ten minute period, accruing a bill of over £1700 (although that sum was later refunded by Apple).
According to its press release, the OFT does not intend to prohibit freemium applications; however, it is concerned as to whether these products market their in-game purchases in a manner which is “misleading, commercially aggressive or otherwise unfair” and in particular whether they use “direct exhortations to children”. A statement by Cavendish Elithorn, the OFT’s Senior Director for Goods and Consumers, seeks to assure the industry by saying that “the OFT is not seeking to ban in-game purchases, but the games industry must ensure it is complying with the relevant regulations so that children are protected. We are speaking to the industry and will take enforcement action if necessary“.
The ‘relevant regulations’ referred to by Mr Elithorn are the Consumer Protection (from Unfair Trading) Regulations 2008 which prohibit various acts and omissions that constitute ‘unfair practices’, including any commercial practice which ‘materially distorts or is likely to materially distort the economic behaviour of the average consumer’. In this context particular attention will be paid to whether or not the pricing models of these applications are sufficiently transparent, and if the full cost of the games is made clear when it is initially acquired for little or no charge. If these requirements are not met, the OFT will have to decide whether such games would not have been downloaded had the full potential cost of the application been more clearly disclosed.
The OFT will announce the next stage in its investigation in October 2013. Meanwhile, it has invited submissions on the issue from interested parties, such as consumer protection, parenting groups, and the industry itself. Details of how to contribute submissions can be found on the OFT’s website.