Europe's app providers were warned by authorities Thursday that many of them are violating consumer protection laws.
Following complaints in the UK, Denmark, France, Italy, Belgium, Luxembourg and Lithuania, EU justice commissioner Viviane Reding and national enforcement authorities from across Europe have been meeting yesterday and today with industry representatives, including Apple and Google, to outline the rules they must follow.
The biggest problem is the issue of so-called "in-app" purchases, by which consumers access special content or features for a fee, on products labeled as "free." Currently more than 50 percent of the E.U. online games' market consists of games advertised as free, despite often incorporating costly, in-app purchases. Misleading consumers in this way could be in breach of E.U. law, the Commission said.
App providers will also be warned not to exhort children to buy items in a game and to avoid marketing free to download games that are not free to play.
Consumers 'want the freedom of freemium'
However representatives defended the so-called 'freemium' model.
"Consumers are the ultimate beneficiaries of the freemium model because it allows them to try before they buy. It gives consumers the power to decide how much, or how little, they want to spend," said Jonathan Zuck, president of the Association for Competitive Technology (ACT).
Consumers are often not fully aware that they are spending money because their credit cards get charged by default. According to EU law, app providers must get explicit consent for such charges. Industry will be asked to commit to providing solutions within a clear timeframe to ensure proper consumer protection.
"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," Reding said.
Zuck said that on-device solutions already exist. "On iOS devices, for example, App Store users are alerted to in-app purchasing features before they download an app. The device owner can also completely disable in-app purchases. All users are required to enter a password before making purchases, which is entirely within a parent's control" he said.