Apple faces threat of legal action over ‘in app’ payments for apps that were marked "free"
Last updated: July 18, 2014 5:41 pm
Apple faces threat of legal action over ‘in app’ payments
By Murad Ahmed, European Technology Correspondent
Apple may face legal action in Europe over claims that it
has not done enough to stop children making “in app” purchases through mobile
apps, in the latest sign that the continent’s authorities intend to put Silicon
Valley companies under greater scrutiny.
The European Commission has released its latest findings
into the policies of Apple, Google and other digital companies regarding in-app
payments on mobile devices. A probe into the issue was sparked last year after
regulators received a “large number of complaints in EU countries”, mainly
about purchases made by children playing games on apps without their parents’
consent.
The commission is demanding a number of concessions on
the matter. These include: agreeing that any app that features an in-app
purchase is not marked “free”; doing more to ensure app makers do not make
“exhortations” within apps that encourage children to make payments; providing
clearer information about who can consent to a payment; and making it easier
for adults to find a company’s contact details to make complaints over
inadvertent in-app payments.
The demands highlight how California’s technology groups
are facing a tougher regulatory regime across the Atlantic, with European
authorities appearing to be more sceptical of their privacy policies and
business models than US regulators.
The commission’s findings have been presented to
individual member states, with each nation’s consumer protection watchdogs
tasked to decide how to respond. The Danish Consumer Ombudsman is the first
group considering legal action over the issue, according to people close to the
matter.
In January, Apple reached a settlement with the US
Federal Trade Commission over a similar inquiry, agreeing to refund customers
at least $32.5m spent on in-app purchases by children without parental consent.
The FTC this month also sued Amazon over the same issue.
People familiar with the commission’s thinking suggested
that Apple’s response to the probe had been “opaque”, with the company refusing
to commit to specific solutions in a defined timeframe. This was in contrast to
Google, which has given detailed proposals on changes to its Play store, which
sells apps for Google’s Android software, as it sought to comply with the
commission’s demands.
Among the issues regulators have highlighted is a default
setting within Apple’s app store where, after a payment is made, there is a
15-minute window allowing purchases without requiring a password. The company
also allows apps to be displayed as “free”, with only smaller wording nearby to
indicate “in app purchases”.
By contrast, Google is implementing changes such that
users are prompted to choose precisely when passwords need to be entered for
in-app purchases. Also, Google has removed the word “free” from all apps that
may be free to download but feature in-app payments. These changes appear to
have satisfied the regulators’ demands.
Apple said it has already made a number of changes to its
app store that deal with the issue. “We made sure any app which enables
customers to make in-app purchases is clearly marked,” the company said.
It has also created children’s section with even stronger
protection, and said it would continue to work with European regulators on the
issue. “These controls go far beyond the features of others in the industry,”
it said.
Neelie Kroes, the commissioner responsible for Europe’s
digital agenda, said: “The commission is very supportive of innovation in the
app sector. In-app purchases are a legitimate business model, but it’s
essential for app-makers to understand and respect EU law while they develop
these new business models.”
Google said: “We’ve been working closely with the
European Commission and consumer protection agencies for the last few months to
make improvements to Google Play that will be good for our users and provide
better protections for children.”
Copyright The Financial Times Limited 2014.
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