Mobile app developers could be breaking the law in the way they offer in-app purchases to children, the Office of Fair Trading (OFT) has said. It added that it believes children are being pressured into making such purchases.
When children wish to explore new areas of a game they have downloaded to a smartphone or tablet, or want to upgrade their weapons or game character's abilities, they are often able to do so by making in-app purchases.
As a result, there have been instances of children unwittingly running up bills of hundreds of pounds, often because they do not realise the purchases they are making are done so with real money.
After investigating 38 games produced by firms around the world, the OFT found that some games included "potentially unfair and aggressive commercial practices to which children may be particularly susceptible".
This included instances where games implied a player would "somehow be letting other players or characters down if they did not obtain something by making an in-game purchase".
It said a typical game that would be unlikely to comply with consumer law would be one based on collecting horses, advertised in an app store as being free. Screenshots from the game show the stables full with horses. But having downloaded the game, the consumer may access the stables but soon discovers that horses must be paid for with real money, costing from 69p to £1.99 each. In this case, the consumer has been misled by the use of the word ‘free'.
The OFT added children were being encouraged or incited through in-game statements or images to make a purchase; that there is not enough transparent and accurate upfront information about the costs involved in downloading and playing games; and that the lines are too blurred between "game currency" and real money.
It said that these practices are "likely to breach consumer protection law" and that companies in the market must make changes to ensure they are not operating illegally.
A recent study by goodtoknow.co.uk found that over 95% of children use their parents' mobile phone or tablet to play games and interact on social media. It said that 80% of parents also download apps specifically for their children to use.
Cavendish Elithorn, OFT executive director, said: "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. 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."
The OFT has published a set of eight principles that it wants developers to follow, including rules such as consumers being told upfront about any possible in-game costs or advertising. Developers must also make it clear that in-game payments are not authorised, and should not be taken, unless the payment account holder (usually a parent) has given their consent.
"These principles provide a clear benchmark for how games makers should be operating, Elithorn added. "Once they are finalised, we will expect the industry to follow them, or risk enforcement action. In the meantime, we want to hear what parents, consumer groups, industry and anyone else with an interest thinks about our principles before we finalise them later this year."
The move was welcomed by the Personal Finance Education Group (PFEG). Tracey Bleakley, PFEG chief executive, said: "In-app purchases on smartphone and tablet apps are a growing concern for parents across the country, and some of the examples that have been highlighted are truly shocking. We are pleased to see the OFT taking action to clean up this industry.
"We also need to ensure that children are given the skills and knowledge to help them avoid being pressured into making purchases they don't need, particularly online. The introduction of personal finance to the new National Curriculum for secondary schools next year will help, but we need to go further and introduce financial education in all primary schools as well."