Mobile app creators who include in-app purchases in their products have been given a two-month deadline to comply with new Office of Fair Trading (OFT) guidelines.
If the producers of online and in-app games do not comply with consumer protection law by 1 April 2014, the OFT said they risk enforcement action.
By 1 April, creators must warn consumers upfront about costs associated with a game or about in-game advertising. They must also make it clear that any important information, such as whether any personal data is to be shared with third parties for marketing purposes, is obvious up-front.
The new guidelines also state that in-app payments are "not authorised, and should not be taken, unless the payment account holder, such as a parent, has given his or her express, informed consent."
Nearly 90% of children aged between seven and 15 have played online games in the past six months, with half paying to play at least once, the organisation warned.
In September 2013, the OFT said mobile app developers could be breaking the law in the way they offer in-app purchases to children. 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.
The OFT investigated 38 games produced by firms around the world and 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".
The organisation also believes that children are 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.
Clive Maxwell, OFT chief executive, said: "Many children enjoy playing these types of games. This rapidly growing creative sector has also brought wider economic benefits. The on-line and apps-based games industry has already made significant improvements during our consultation process. But it still needs to do more to protect children and treat its customers fairly.
"Our principles make clear the type of practices that games makers and platform operators should avoid. Parents and carers have an important role to help protect their child and their bank balance.
Our advice is that parents check their device settings, play their child's games themselves and read the game's description online. Parents will also be encouraged to report concerns to Citizens Advice."
The OFT has issued a handful of tips for concerned parents. These are:
- Check the "payment options" settings on your device. One option is to make sure that a password is required for every purchase, rather than opening a "payment window" in which the password will not be needed for any further payments.
- Check whether there are any in-game purchases or whether the game contains a social element by looking at its description on the app store or the game's website.
- Play the game yourself to understand what children will see.
- Be aware that game content could change via automatic updates, so check regularly that you continue to be happy with their children playing a game.