Sladen Snippet - In App Purchase Addiction – Software Developers Take Note

There is no doubt about it, kids are addicted to mobile phones.  To add to their fascination, games are becoming more and more addictive by requiring in-app purchases to maximise the experience of the game.  Even though an app or game might be free to download, the app may offer the purchase of extra content such as additional lives, virtual supplies like diamonds, food, ammunition, clothing or virtual currency to buy more virtual supplies.  And this can be addictive.  For $2 I can buy 500 diamonds which will let me buy lots of things from the virtual corner store or for $2 I can buy an extra life and continue to play the game.

Apart from being highly addictive, particularly for children, there are an increasing number of cases around the world of unauthorised in-app purchases.  Whether people do not understand that an in-app purchase is actually spending real money or the purchases are made by someone other the owner of the mobile device.  The problem is the way in which the app communicates to the user about the in-app purchases.  Once a password is inserted there is a 15-30 minute window where purchases can be made without requiring the password.  This is where kids can get excited and spend up big.  The purchases are then charged to the owner of the mobile device, usually mum or dad. 

There has been a recent class action filed in the US against Google based on children racking up unauthorised charges for in-app game purchases without the knowledge of the parents[1] and a similar lawsuit was filed against Apple which settled in January 2014 for $32.5 million.  In Australia, the ACCC is examining this issue. 

With the ACCC’s attention on in-app purchases, developers should consider updating their apps to prevent unauthorised in-app purchases and minimise the risk of misleading or deceptive conduct (within the limits of the particular app platform of course).  A starting point is to:

  1. Tell consumers upfront about any possible in-game costs or advertising.
  2. Prominently disclose important terms prior to download.
  3. Ensure payments are not taken unless the account holder has positively indicated his/her expressed informed consent.
  4. Not include direct incitements to children to make a purchase or persuade others to make a purchase for them in a game.

For more information, please contact

Daniel Smedley
Principal
Sladen Legal
+61 411 319 327 | +61 3 9611 0105
dsmedley@sladen.com.au

Michelle Dowdle
Special Counsel
Sladen Legal
+61 3 9611 0114  | +61 408 674 2564
mdowdle@sladen.com.au

[1] Imber-Gluck v. Google Inc., No. 5:14-cv-01070 (N.D. Cal.)