In-app Purchases: OFT Issues Warning to Games Industry

January 30, 2014

The OFT has published its final principles for online and in-app games, and given games producers a deadline of 1 April to ensure that their games do not breach consumer protection law.

The OFT principles state that consumers should be told upfront about costs associated with a game or about in-game advertising, and any important information such as whether their personal data is to be shared with other parties for marketing purposes. The principles also make clear that in-game 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.

Failure to comply with the principles could risk enforcement action.

The OFT has also published guidance for parents that will help make sure that children are not pressured into making in-game purchases and reduce the risk of their making unauthorised payments. 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.

Specifically, the OFT advice suggests that parents:

  • Check the ‘payment options’ settings on their 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 themselves to understand what children will see.
  • Be aware that game content could change via automatic updates, so check regularly that they continue to be happy with their children playing a game.

The OFT has welcomed the positive engagement by the games industry with the OFT’s investigation, and the significant improvements to its practices that have already been made by many firms since the OFT launched its investigation.

Many games are produced abroad and the OFT has been leading the global debate on these issues. By working closely with international partners, the OFT has ensured that the principles are consistent with the laws of most key jurisdictions to help to raise standards globally.

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.’

Citizens Advice has incorporated the OFT’s advice into its new page on online and in-app games (see its AdviceGuide). The OFT, and the CMA from 1 April 2014, will have access to complaints and may use them in deciding whether to take enforcement action.

Competition and Markets Authority Chief Executive, Alex Chisholm, said:

‘Once the CMA acquires its powers in April 2014, we will pick up from where the OFT has left off. The CMA will continue to monitor the market to check whether the industry is complying with its legal obligations. Traders in the industry are therefore advised to satisfy themselves that they are in compliance with the Principles ahead of this next stage of the project. Failure to comply with the Principles could risk enforcement action’ 

The OFT published sector-wide principles for consultation in September 2013.