Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: European Commission puts heat on Apple, Google over in-app purchases, (Jul 18, 2014)

By Greg Hammond, J.D.

Joint action by the European Commission (EC) and Member States has led to better protection for consumers with regards to the risks of online and mobile in-app purchases.

In a rare move, the EC joined forces with national authorities in December 2013, to take coordinated enforcement action in the EU on mobile and online in-app purchases. The joint team, asked Apple, Google, and the Interactive Software Federation of Europe (ISFE) to propose solutions to identified problems regarding in-app purchases in online games, such as inadvertent purchases made by children. As a result, the EC and Member States issued a number of common positions to help regulate app-makers and in-app purchases. The EC has found that Google has taken affirmative steps to follow the joint positions, which is delivering real results.

“This is the very first enforcement action of its kind in which the European Commission and national authorities joined forces,” stated EU Commissioner for Consumer Policy Neven Mimica. “I am happy to see that it is delivering tangible results. This is significant for consumers. In particular, children must be better protected when playing online. The action also provides invaluable experience for the ongoing reflection on how to most effectively organise the enforcement of consumer rights in the Union. It has demonstrated that cooperation pays off and helps to improve the protection of consumers in all member States.”

The EC and Member States issued the following positions after consulting Apple, Google, and ISFE: (1) games that are advertised as “free” should not mislead consumers about the actual costs involved; (2) games should not directly encourage children to make in-app purchases, or to pressure adults to make such purchases for children; (3) developers should adequately inform consumers about payment arrangements for purchases, and consumers should not be automatically debited without their explicit consent; and (4) consumers should be provided with traders’ email addresses in the event they have questions or complaints.

According to the EC, Google has instituted multiple changes that are already being implemented, including: omission of the word “free” when games allow any in-app purchases; creating guidelines to prevent the encouragement of in-app purchases to children; and changing its default settings to authorize payments prior to every purchase. Although Apple has addressed concerns regarding payment authorization, the company has not yet made any firm commitments or immediate solutions. However, the EC will continue to engage with the company to ensure compliance. The EC and Member States have also requested that ISFE provide concrete actions to address compliance with the joint action’s positions.

Companies: Apple, Inc.; Google, Inc.

News: ConsumerProtection