FTC investigating mobile microtransactions

US consumer protection agency promises to investigate marketing and delivery of "in-app" purchases following parent outcry over free-to-play titles.

The free-to-play, microtransaction-based business model has proliferated across a variety of genres and platforms in recent years, fueled by success stories on Apple's iOS, Facebook, and the traditional massively multiplayer online gaming market. However, that way of doing business has now drawn the scrutinizing eye of the Federal Trade Commission.

Smurfberry cultivation is a labor-intensive industry.

The Washington Post reports this week that the FTC will delve into the availability and sale of virtual goods within mobile applications, such as those available in titles for Apple's iPhone, iPod Touch, and iPad. In a letter to Rep. Ed Markey (D-Mass.), FTC chairman Jon Leibowitz said that "in-app purchases" could be problematic, as certain consumers may not fully grasp the outcome of those charges.

"We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases," Leibowitz said in the letter, which was obtained by the Washington Post. "Let me assure you we will look closely at the current industry practice with respect to the marketing and delivery of these types of applications."

Leibowitz's response followed a Washington Post report that targeted the exorbitant price of some objects in certain mobile titles. Specifically, the newspaper's article targeted Capcom's Smurfs Village, which contains the $99 Smurfberries item, and Pocket Gems' Tap Zoo, where gamers can buy in-game animals by purchasing virtual coins with real-world money.

Rep. Markey's letter to the FTC took issue with the positioning of these in-game items to children and the 15-minute unlimited purchasing window after an iTunes password is entered.

"After the Washington Post first broke this story earlier this month, I sent the Federal Trade Commission a letter calling on the agency to investigate the issue of 'in-app' purchases and provide additional information about the promotion and delivery of these applications to consumers, especially with respect to children," Rep. Markey said in a statement. "What may appear in these games to be virtual coins and prizes to children result in very real costs to parents."

Apple had not responded to a request for comment on the FTC's investigation as of press time.

Got a news tip or want to contact us directly? Email news@gamespot.com

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49 comments
FallenOneX
FallenOneX

@ Yuck_Too You have a few good points..... but you seem to have missed something in my post. You gave your child the old iTouch when your wife upgraded. I specifically stated I had a problem with people BUYING such an item for someone so young. I know parent that bought their 6 year old kids iPads, WTF! Yes, kids do learn faster than we think they do, I realized that the first time my daughter took a picture with my wife's phone and sent it to me. I agree, the $100 purchase was a scam (for children AND adults, but most adults just thought it was a typo and did it anyways thinking they could talk their way out of it when the bill came), but they aren't just focusing on that one thing, they're trying to lump all in-game purchases from multiple companies in on this. "but that doesn't mean denying them things outright to make your parenting life easier is the solution." You're obviously younger than me. When I grew up, it was perfectly fine to BEAT YOUR KID'S @$$ in public if they decided to throw a tantrum because you didn't want to buy them the toy they wanted in a store. Now I'm not saying that I deny my child everything she wants to make my life easier, but she doesn't get everything she wants because so-and-so has one. I don't have blocks on any of my TV's, because I tell my child what she can and cannot watch. No, it's time to start blaming the parents, because if we don't, it will never be their fault for anything.

campbell153
campbell153

Microsoft do something similar... they sneakily take money from peoples credit cards... my XBL account gets auto renewed from a credit card i deleted from my live account on Xbox.com.... my bank say Microsoft skim pennies from peoples accounts too! W*&%*!!

ropumar
ropumar

Bad parents trying to ruin a fair business model. Teach you children to use technology before giving them access to the internet. Perhaps is asking to much since the parents themselves don't even know how to use computers.

Paul2004
Paul2004

Long time coming, Free games do need to cover some costs but its far to easy for kids to do it. They need some kind of system to ensure they understand exactly what their doing and the pro/cons of it I dont buy ingame content for free games, not bought a DLC to date infact but ive seen just how easy it is to get sucked into it

Yuck_Too
Yuck_Too

@FallenOneX Funny my wife has / had a iTouch and when she got her iPhone well my daughter got to play with the 'old' iTouch. My daughter is 3 and knows how to navigate, search, play and yes download. Even send things with the itouch now. Sort of unnerving in a way to have her send me an email of something she doodled in some drawing app she has on the thing. And it was equally funny when she told me my DS was broken because the screen was not working (because it was not touch sensitive!). Our kids learn faster then we'd care to admit. And I know most adults cannot read the fine print so you want to hold a child up (or more correctly hold them back) to those standards? It's the parents responsibility to protect and educate their children no doubt about that...but that doesn't mean denying them things outright to make your parenting life easier is the solution. Parental controls and bocks, paying attention to and playing with your kids, watching and even learning from them is what it takes...but when someone takes advantage such as allowing a child to spend $100 on something like that...then we should be drawing a line against that and not just blaming the parents.

Yuck_Too
Yuck_Too

It is a rip off...you honestly mean to tell me a 'free' game that has a optional $100 purchase is anything other then a scam? Imagine if Sony or MS released a title that you could only really play with $100 purchase after the fact. That would cause a holy flame war...so why defend the nonsense in regards to mobile devices? Make no mistake boys and girls...if they get away with it...others will follow...it's how we went from the first bit of 'extra' content and $2 horse armor in Oblivion to where we are now.

Ashmodai69
Ashmodai69

once again the blame seems to land on the industry , not the parents *sigh*

Jedilink109
Jedilink109

Wait is everyone so sure they're called Smurfberries and not actually supposed to be called Dingleberries? Because that's what 99 bucks feels like for something like that.

Jedilink109
Jedilink109

Ok so here's a solution, buy your kids some REAL games on these devices and those games won't be ones that require microtransactions in the first place. Look at all the games that seem to have this crap. It's all that casual gaming stuff. If you're getting your kids a game like Nova or Across Age then those games don't ask for extra purchases. Give your kids free games like Farmville or something and those games will ask for in app purchases. Not to mention the fact that there are restrictive locks built into the iphone to stop purchases on the device without a passcode. If the kid knows the itunes login password then they should be smart enough to realize that what they're doing is wasting their parent's money. However, once again, if you buy your child a REAL game on there, then those aren't the types of games that will constantly require extra purchases to get the most out of the game anyway. Either your kid is smart enough to know not to waste money or you as a parent should be smart enough to realize your kids aren't yet and that you should put a code lock on the phone to stop it in the first place.

FallenOneX
FallenOneX

As a parent, I have a problem with people buying their children high end Smart phones and Ipod/Ipads in the first place. If they aren't old enough to read AND understand the prices and fine print, they don't need to have it.

Cwagmire21
Cwagmire21

Title needs to be renamed "FTC investigating stupid parents."

Shelman23
Shelman23

So we really need the Gov't to step in because Adults can't teach their own freaking children? Geez Louise. I must admit though the so-called parenting these days is a joke for the most part. It's sad when you notice yourself applauding parents for actually parenting their children!

nathanmaxtro
nathanmaxtro

"Rep. Markey's letter to the FTC took issue with the positioning of these in-game items to children and the 15-minute unlimited purchasing window after an iTunes password is entered. " This for real? So little Suzy can ask her daddy to type in his password so she can buy a .50 flower and then for 15 minutes she can buy whatever the hell she wants without needing a password? That is a major security flaw and games that have virtual items for exorbitant prices are abusing it. I would say that the vast majority of $99 Smurfberries were purchased after a much cheaper items was purchased. No password was requested. The child has no concept of money, and the parent has no idea their child has free reign to buy anything.

maxwell97
maxwell97

Maybe parents shouldn't give young kids access to an iTunes account? Seriously, WHY would you give a kid access to any device capable of microtransactions? In this situation, I blame the parents, for being dumb.

StJimmy15
StJimmy15

Um, maybe don't charge ridiculous prices for ridiculous things? Obviously they're hoping someone will click it by accident. Some in-app purchases are awesome tho...

nathan83_xp
nathan83_xp

more bad news for apple. Couple that with Jobs being sick, I wonder how their stocks are doing.

shakensparco
shakensparco

Why would you give your kid an iTunes account with a credit card attached in the first place?

alchemist889
alchemist889

If your kid is willing to pay $99 for virtual Smurfberries I'm afraid you have much bigger problems than losing $99.

HollowNinja
HollowNinja

It's ridiculous haw many parents irresponsibly let their kids do this stuff. Not to mention, it's irresponsible of the companies to make this possible.

HollowNinja
HollowNinja

It's ridiculous haw many parents irresponsibly let their kids do this stuff. Not to mention, it's irresponsible of the companies to make this possible.

MJ12-Conspiracy
MJ12-Conspiracy

I doubt they'll find anything, even if they do I doubt anything will really be done to any possible offenders.

woolysockofdoom
woolysockofdoom

$99 Smurfberries, wow. This seems like a con, and should be looked at very closely.

alexLmx6
alexLmx6

So.. Don't let your children play these games. It's the same as the whole California game banning thing, just lazy parents trying to blame anybody but themselves for their childrens' actions. And if an adult is too lazy to read the terms of service before playing a game, well they deserve to have their money taken away.

Ryosagi
Ryosagi

Best to have a password or code to enter first before having the item instead of an instant buy & straight to your bill. Prevent kids from getting the item and makes sure you're the one responsible for the purchase.

wyan_
wyan_

This is so smurfed up! I am absosmurfly outraged at what a smurf off these micro charges are!

Barighm
Barighm

Just saw Scyld's post after I posted. If what he/she says is true, then yes, I can definitely see the need for protection. Never give a kid free access to your finances like that. Shame on these corporations for allowing it to happen (darn safe bet they're aware of this and are trying to make as much money as possible before they get caught).

KBABZ
KBABZ

What the hell is a kid doing with an iPhone anyway? Texting before times tables, seriously?

Barighm
Barighm

Eh? How are these children able to make these purchases in the first place? Wait, the parents gave them their credit card numbers? No password protection system or confirmation box? Well dang, they're asking for it, aren't they?

scyldschefing
scyldschefing

As I understand it, it's not $99 for a single item, but rather you can buy up to $99 worth of them at once. One 8 year old girl racked up a $1400 bill for everything she bought. A lot of you just don't understand one important difference between these f2p apps and f2p MMOs: For f2p MMOs, YOU HAVE TO BUY VIRTUAL CURRENCY AS A SEPARATE TRANSACTION. An 8 year old girl wouldn't be able to do that. HOWEVER, for f2p APPS, THE MONEY IS AUTOMATICALLY CHARGED TO YOUR ITUNES ACCOUNT. You DON'T have to enter your billing information separately in order to buy items in the app. That's what's really messed up with this.

Freezezzy
Freezezzy

$99?! For an in-game virtual item? There should be a limit on these so-called "micro" transactions, because $99 goes way beyond the definition of micro, in my opinion.

jcbullen
jcbullen

Let's see.... dinner and a movie with a cute girl and possibly some alcohol for my place afterwards orrr..... smurfberries. Geeze, there's a pretty significant difference of value for these equally priced options.

torres_unix
torres_unix

Even if it isn't a good idea that the gov't step in, these microtransaction companies' shady techniques must be put under a leash. There should be at least one "STOP!! You're about to spend REAL money on virtual goods", kids may don't know the difference but I almost bit the hook several times. As for the kids, just don't hand over your iTunes password to your kids, period!

sonsofliberty84
sonsofliberty84

actually namdar the 21st century didn't start until 2001

namdar
namdar

@emperiox I have had customer services issues with Steam and all have been resolved in a timely manner. As for games not working thats not steam thats the computer your running them on! Besides having a digital copy of a game is not something you can just give back. Welcome to the 21st century my friend we been here since 2000!

namdar
namdar

Well thats like that $100 iphone app that was nothing but a shiny animating gem.

FriendBear
FriendBear

Well its nothing new, look at all the supposedly free to play MMOs out there, whilst technically they are free but only to a certain point, if you want the full experience you obviously have to pay money and in some cases...could end up costing you way more than a monthly subscription if you're not careful. Look back at before texting plans was available and kids started knocking up huge mobile charges, would you trust your children with a mobile phone that could play something like farmville or other apps that require $$ charges?

Swedenik
Swedenik

99$!? I could buy REAL smurfberries with that

garrett_duffman
garrett_duffman

[This message was deleted at the request of a moderator or administrator]

garrett_duffman
garrett_duffman

don't knock smurfberries... i bought them a month ago and let me say, my life will never be the same.

DennisWZH
DennisWZH

99$ berries from capcom. why am i not surprised..

FlashCharge
FlashCharge

Everyone knows that there is nothing free in this world. Like most things in this world there is always a gimmick.

Roger_Smith
Roger_Smith

$99 smurfberries? Must be potent stuff.

LinusBlue
LinusBlue

99$ for smurf berries? Is this a joke?

emperiox
emperiox

There needs to be consumer protections laws against Steam. I'm sorry, but when is the FTC going to do something about that? They scam lots of people, and refuse to give people refunds for broken games. Some of the stories I've googled on Steam's shady customer service, is just sickening and wrong.

seanssss
seanssss

@DarthVeng_basic You're actually right about something

diegomode
diegomode

Capcom's most expensive product: Smurfberries! We are living strange days

DarthVeng_basic
DarthVeng_basic

Milk Milk Milk. Humans are nothing but voters, consumers, and tax payers. Numbers in a line.

Bozanimal
Bozanimal

On one hand, microtransactions are a sneaky, almost manipulative way to take advantage of consumers, particularly when those customers are young enough to not have developed much financial sense. On the other hand, I'm none too excited about the government stepping in to potentially regulate another industry. Nobody is forcing anyone to buy these digital items, after all; they're mostly vanity items. Should be interesting to see this play out.