OFT Proposes In-App Purchase Crackdown

The Office of Fair Trading (OFT) is threatening to crack down on the gaming industry after it published its proposed rules for governing in-game purchases by children.

The OFT’s proposed principles have been published for consultation and follow its investigation in April this year into whether children are being unfairly pressured or encouraged to pay for additional content in web and app-based games.

‘Freemium’ Proposals

The OFT is concerned that the rapidly growing online and app-based games industry is pressuring children to make in-game purchases.

This comes after a growing number of reports claiming that children have been purchasing items worth thousands of pounds, unbeknown to their parents. Complaints to PhonePayPlus, the UK regulator of premium rate phone services, have risen by 300 percent.

Many modern games such as Zynga’s Farmville, EA’s Real Racing 3, or Kabam’s Kingdoms of Camelot, are free to play or install. However, in order to unlock more content or upgrades, in-game currency usually has to be acquired via in-app-purchases. Currently, 80 of the 100 top-grossing Android applications employ this ‘freemium’ model.

In an effort to tackle this, the OFT has proposed eight principles, which start with consumers being told upfront about any possible in-game costs or advertising. Consumers must also be informed of any important information such as whether their personal data is to be shared with third parties.

The OFT proposals also call for a change to make in-game payments unauthorised, unless the payment account holder (such as a parent), has given their informed consent.

“This is a new and innovative industry that has grown very rapidly in recent years, but it needs to ensure it is treating consumers fairly and that children are protected,” explained Cavendish Elithorn, OFT Executive Director.

“The way the sector has worked with us since we launched our investigation is encouraging, and we’ve already seen some positive changes to its practices.

“These principles provide a clear benchmark for how games makers should be operating. Once they are finalised, we will expect the industry to follow them, or risk enforcement action.”

OFT concerns

The OFT proposals come after its investigation found that “some games include potentially unfair and aggressive commercial practices to which children may be particularly susceptible.”

It cited the example of games implying the player would somehow be letting other players or characters down if they did not obtain something by making an in-game purchase.

But the OFT also had other issues and concerns, which included a general lack of transparent information about costs and other information that may impact on the consumer’s decision to play, download or sign up to a game. It is also had concerned about “blurring the distinction between spending in-game currency and real money.”

Finally, it felt that children being encouraged or incited through in-game statements or images to make a purchase, or persuade others to make a purchase. The OFT says that these commercial practices “are likely to breach consumer protection law and that companies in the market need to implement changes to ensure full compliance with their legal obligations.”

Not Just Money

The OFT proposals meanwhile were welcomed by educational, entertainment experts Leapfrog UK, but it warned that it was not just about excessive in-app purchasing, but access to inappropriate content that is also a concern to parents.

“Whilst the OFT report examines in-app purchasing in detail, in reality it also places a spotlight on the wider issue of child-safe technology as a whole,” said Chris Spalding, SVP & Managing Director EMEA/Australasia of LeapFrog UK.

“As smart phones and adult tablets become more prevalent in households with children, it is not just about incurring costs accidentally, but also about children potentially experiencing inappropriate content via the internet,” said Spalding.

This sentiment was backed up by education expert, Janette Wallis. “These devices can be wonderfully educational and entertaining for children, but their Wi-Fi capabilities also mean that children can stray into inappropriate or adult areas online, especially if unsupervised,” said Wallis. “Parents can take simple measures to control their child’s tech experiences but don’t always know where to start- this is where brands within this sector could help.”

The industry, developers and all interested parties have until 21 November to submit their responses to the OFT’s Principles.

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