The European Union is trying to determine how best to protect children from app developers who target them through "Freemium" business models. According to Wikipedia, Freemium is a pricing strategy by which a product or service (typically a digital offering such as software, media, games or web services) is provided free of charge, however, money is required for advanced features, functionality, or virtual goods.
European consumer protection officials are focusing their inquiry on Apple and Google because of their strong market position in the app ecosystem. According to the EU, the 4 main issues that need to be addressed include: 1) Games advertised as “free” should not mislead consumers about the true costs involved; 2) Games should not contain direct exhortations to children to buy items in a game or to persuade an adult to buy items for them; 3) Consumers should be adequately informed about the payment arrangements and purchases should not be debited through default settings without consumers’ explicit consent; 4) Traders should provide an email address so that consumers can contact them in case of queries or complaints.
In a press release regarding this matter, Vice-President Viviane Reding, the EU’s Justice Commissioner stated, "Misleading consumers is clearly the wrong business model and also goes against the spirit of EU rules on consumer protection. The European Commission will expect very concrete answers from the app industry to the concerns raised by citizens and national consumer organizations."
Earlier this year, Apple agreed to an FTC settlement and promised to pay at least $32.5 million dollars to settle a complaint that alleged proper parental permission was not always obtained when children made app purchases on its platform. This was another warning shot to the app ecosystem that it must do a better job of protecting children and families
The bottom line is that regulators around the world are ramping up their investigations and enforcement actions against companies that target children online. Therefore, corporate best practices should ensure that children's interests are protected when interacting with them on digital platforms.
Copyright 2014 by the Law Office of Bradley S. Shear, LLC All rights reserved.
