FTC to review in-app purchases
Feb 28, 2011 3:52 PM, By Debra Kaufman
Capcom’s “Smurfs Village” is one game under review for in-app purchases. Image courtesy Capcom Mobile.
After Rep. Edward J. Markey, D-MA, and Sens. Amy Klobuchar, D-MN, and Mark Pryor, D-AR, wrote letters to Federal Trade Commission (FTC) Chairman Jon Leibowitz urging an investigation into in-app transactions, the FTC has launched a probe aimed especially at games accessed by children for Apple iPhones, iPads and iPods. As reported by The Washington Post, one child racked up a $1400 bill by playing Capcom Mobile’s “Smurfs Village” game and buying $99 batches of Smurfberries. As Markey stated, “What may appear in these games to be virtual coins and prizes to children result in very real costs to parents.”
Leibowitz agreed that the practice of "in-app purchases" for certain applications “raised concerns that consumers may not fully understand the ramifications of those charges.”
In response, Recharge Studios, which makes “Dolphin Play,” one of the offending games, has begun issuing a disclosure on its iTunes page and urged Apple to change its policies to close a 15-minute window in which a user can make in-app purchases without re-entering his password and also to make instructions more clear on how to get refunds for accidental purchases. In-app transactions in free and premium apps make up 49 percent of iPhone developer revenues and 29 percent of iPad developer income.
The FTC and Justice Department have separately began an antitrust review into Apple’s subscription service for publishers to examine whether Apple is using its dominance in mobile apps, via the iTunes store, to pressure business partners.
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