On 9 December 2013, the Australian Competition and Consumer Commission (ACCC) issued a media release which called for new industry based principles to combat misleading and deceptive conduct in the promotion of mobile phone game apps. Of particular concern to the ACCC are “free” game apps which target children and do not adequately disclose associated costs. The ACCC has also indicated that it is willing to take enforcement action where contraventions of the Australian Consumer Law are identified.

Background

In September 2013, the ACCC joined an international effort to identify smartphone and tablet apps that may mislead young children into making unauthorised in-app purchases.  Of particular concern were “free” apps that failed at the initial point of sale to adequately disclose the potential for considerable in-app purchases. These purchases are often capable of execution without restrictive passwords or general parental oversight.

The ACCC conducted a sweep of more than 340 game apps in the Google Play and Apple App stores. Fewer than 25% of child-friendly “free” game apps investigated disclosed that in-app purchases could be made.  Fewer than 20% of child-friendly game apps investigated included information about how to restrict devices to prevent inadvertent purchases.  Many also failed to provide access to the terms and conditions prior to downloading the games.

Proposed Principles

The ACCC is supporting the implementation of principles in Australia similar to those recently proposed in the UK by the UK Office of Fair Trading.  Those principles include notifying consumers up-front about in-game costs and advertising, disclosing important terms prior to download, and requiring that an account holder such as a parent provides informed consent to payments before they are authorised.

The UK’s Office of Fair Trading has already circulated principles for discussion. The consultation period closed in late November and the results are due to be released by February 2014.

ACCC Enforcement

The ACCC is continuing to investigate concerns about misleading and deceptive conduct in relation to numerous game apps.  The ACCC has also indicated that it may take enforcement action where contraventions of the Australian Consumer Law have been identified.  These investigations suggest that a significant change to the regulation of the mobile game app industry in Australia may be imminent.  App developers and platform providers should review their current practices to avoid being pursued by the ACCC for contraventions of the Australian Consumer Law.