ACCC raises concern over conduct in the mobile app industry

by DLA Piper
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The Australian Competition and Consumer Commission (ACCC) has this week expressed the need for industry guidance to ensure greater consumer protection by the “app” games industry.

After conducting a “sweep” of 340 app games across the Google Play and Apple App Store platforms, the ACCC identified “the potential for misleading and deceptive conduct in the promotion of apps as well as inadequate disclosure of key terms and conditions associated with using the apps”. 

Specifically, the ACCC found that more than 75% of “free” apps for children on one platform failed to disclose the possibility of in-app purchases. It also discovered that more than 80% of apps across both platforms failed to include information about how to prevent accidental in-app purchases.

As we have previously reported, the UK Office of Fair Trading (UK OFT) conducted an investigation into “whether children [were] being unfairly pressured or encourage to pay for additional content in web and app-based games” and released a report on 26 September 2013. The report contained eight draft principles which were intended to provide the industry with guidance as to the standards expected of them. 

 The ACCC has indicated its support for these eight principles, which are:

  1. Information about the costs associated with a game should be provided clearly, accurately and prominently up-front and before the consumer downloads the game.
  2. All material information about the game should be clear and provided up-front before the consumer downloads the game.
  3. Information about the business, e.g. who to contact in case of queries or complaints,  should be clear and provided up-front before the consumer downloads the game.
  4. The commercial intent of any in-game promotion of paid-for content, should be clear and distinguishable from gameplay.
  5. A game should not mislead consumers by giving the false impression that payments are required or are an integral part of the way the game is played if that is not the case.
  6. Games should not include practices that have the potential to exploit a child’s inherent inexperience, vulnerability or credulity.
  7. A game should not include direct exhortations to children to make a purchase or persuade others to make a purchases for them.
  8. Payments should not be taken from the payment account holder unless authorised. 

Whilst the draft principles are not binding on Australian app developers, they provide an indication of areas of concern and issues that might arise under the Australian Consumer Law (ACL). The ACCC has indicated that it may take enforcement action where contraventions of the ACL are identified however it is currently urging app developers and platform operators to take steps to address these issues.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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