Europe’s “app economy” is booming. It employs over 1 million people and is expected to be worth €63bn in the next five years. According to the external app analytics platform Distimo, around 80% of the revenue – estimated at over 10 billion EUR per year – of one supplier comes from purchases made by consumers from within an application by which consumers access special content or features, commonly called “in-app” purchases. For the app economy to develop its full potential and continue innovating, consumers need to trust the products. At present over 50% of the EU online games’ market consists of games advertised as “free”, although they often entail, sometimes costly, in-app purchases. Often consumers are not fully aware that they are spending money because their credit cards get charged by default. Children are particularly vulnerable to marketing of “free to download” games which are not “free to play”. Following complaints from all over Europe, the European Commission is meeting today and tomorrow (27 and 28 February) with national enforcement authorities and large tech companies in order to discuss these concerns. Industry will be asked to commit to providing solutions within a clear timeframe so as to ensure proper consumer protection for apps customers.
Vice-President Viviane Reding, the EU’s Justice Commissioner said: “Europe’s app industry has enormous potential, both to generate jobs and growth, and to improve our daily lives through innovative technology. For the sector to deliver on its potential consumers must have confidence in new products. 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 organisations.”
Commissioner Neven Mimica, responsible for Consumer Policy said: “Consumers and in particular children need better protection against unexpected costs from in-app purchases. National enforcement authorities and the European Commission are discussing with industry how to address this issue which not only causes financial harm to consumers but can also put at stake the credibility of this very promising market. Coming up with concrete solutions as soon as possible will be a win-win for all.”
At the meetings with the industry, national enforcement authorities across the EU will present their common understanding of how to apply the relevant consumer rules in this area. The action is led by the Danish Consumer Ombudsman. France, the United Kingdom, Italy, Belgium, Luxembourg and Lithuania, members of the Consumer Protection Cooperation (CPC) network in charge of enforcing consumer rights across the EU, will be participating to the meetings as well.
The four most important issues raised by consumers and which will be discussed at the meetings are :
Games advertised as “free” should not mislead consumers about the true costs involved;
Games should not contain direct exhortations to children to buy items in a game or to persuade an adult to buy items for them;
Consumers should be adequately informed about the payment arrangements and purchases should not be debited through default settings without consumers’ explicit consent;
Traders should provide an email address so that consumers can contact them in case of queries or complaints.
Next Steps: The meetings are an opportunity for the Commission and Member State authorities to reach a common understanding with industry to address the concerns raised by consumers. In any case, the European Commission, together with the national consumer rights enforcement authorities will continue to follow up with any necessary action.
The EU market for online and mobile games and applications is booming. In 2011, consumers in the UK, Germany, France, Italy, Spain, Netherlands and Belgium are estimated to have spent €16.5 billion on online games. According to an external study of Bitkom (an association representing the telecoms and ICT industry in Germany) in Germany alone revenues from in-app purchases doubled between 2012 and 2013 reaching 240 million EUR. Over one million of the customers are children and teenagers aged between 10 and 19 years.
The EU Consumer Protection Cooperation (CPC) Regulation (EC N°2006/2004) links national consumer authorities in a pan-European enforcement network. Thanks to this framework, a national authority in one EU country can call on their counterpart in another EU country to ask them to intervene in case of a cross-border infringement of EU consumer rules.
The principles on online games and in-app purchases which the UK Office of Fair Trading published on 30 January 2014 are consistent with this action.
For more information
The Common Position of the national consumer enforcement authorities on consumer protection in games apps can be found here: