33/13 12 April 2013 -
The OFT has launched an investigation into whether children are being unfairly pressured or encouraged to pay for additional content in 'free' web and app-based games, including upgraded membership or virtual currency such as coins, gems or fruit. Typically, players can access only portions of these games for free, with new levels or features, such as faster game play, costing money.
As part of the investigation, the OFT has written to companies offering free web or app-based games, seeking information on in-game marketing to children. The OFT is also asking for parents and consumer groups to contact it with information about potentially misleading or commercially aggressive practices they are aware of in relation to these games.
The OFT investigation is exploring whether these games are misleading, commercially aggressive or otherwise unfair. In particular, the OFT is looking into whether these games include 'direct exhortations' to children - a strong encouragement to make a purchase, or to do something that will necessitate making a purchase, or to persuade their parents or other adults to make a purchase for them. This is unlawful under the Consumer Protection (from Unfair Trading) Regulations 2008.
As part of the investigation, the OFT will also consider whether the full cost of some of these games is made clear when they are downloaded or accessed, potentially leading to children and parents to make decisions they may not have made if prices were more transparently advertised at the start of the purchasing process.
Cavendish Elithorn, OFT Senior Director for Goods and Consumer, said:
'We are concerned that children and their parents could be subject to unfair pressure to purchase when they are playing games they thought were free, but which can actually run up substantial costs.
'The OFT is not seeking to ban in-game purchases, but the games industry must ensure it is complying with the relevant regulations so that children are protected. We are speaking to the industry and will take enforcement action if necessary.'
As part of its investigation, the OFT is asking for information from key players in the sector, including games developers and games hosting services, as well as consumer and parenting groups. The information will be used to understand business practices used in this sector, to establish whether consumer protection regulations are being breached and if so what the consumer harm is. To contact the OFT with information, please see the details on the project page. The OFT expects to publish its next steps by October 2013.
1. On 9 April 2013, 80 of the 100 top-grossing Android apps, for example, in the UK were free to install and raised revenue through in-app purchases. Single purchases of virtual currency typically range from a few pence to £70 or more. According to Ofcom, home internet use for five- to seven-year olds is 67 per cent, for eight- to 11-year olds is 82 per cent and for 12- to 15-year olds is 90 per cent. In 2012, 28 per cent of children aged five to 15 owned smartphones, an increase from 20 per cent in the previous year.
2. The Consumer Protection from Unfair Trading Regulations 2008 prohibits unfair commercial practices. Under Regulation 3, a commercial practice is unfair if it: contravenes the requirements of professional diligence and materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the goods or services; is a misleading action; is a misleading omission; or is aggressive. Paragraph 28 of Schedule 1 of the Regulations also prohibits including in an advertisement a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy advertised products for them.
3. At this stage, the OFT cannot identify the companies that are subject to this investigation and no assumption should be made that any companies being investigated have broken the law.