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.
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.

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