Fun and games? The cost of ‘freemium’

Owning living, breathing animals can cost a lot of money but the virtual ones can set you back a pretty penny too if you’re not careful. A couple of weeks back, we downloaded an annoying cat on to our smartphone for the amusement of a small child.

While the game was free, the shiny gold coins needed to buy the cat’s food and hats and sunglasses and magic potions and drapes for its kitchen – yes, you read that right – was not. It has taken swift intervention on numerous occasions to stop the child innocently blowing as much as €90 on coins to keep her cat in the manner to which it has become accustomed. Welcome to the “freemium” world, where the games are free at the start, but once the addiction takes hold, they bleed you dry.

Mobile games such as Candy Crush Saga , Angry Birds , Clash of Clans and hundreds more like them are free, but they allow you to spend money using your iTunes, Google or Microsoft account while you play to advance to higher levels or get new things to make your experience more fun. These in-app purchases have helped to drive up spending on mobile games by more than 60 per cent on the last year.

However, earlier this month the European Commission announced plans to take on the big players, such as Apple and Google, and the app makers to make sure they were more upfront about the sometimes hidden costs of these games. It is acting after concerns were raised by consumer groups across the EU, and its first step will be to hold talks with the industry, policymakers and consumer protection authorities ahead of the publication of more transparent guidelines.

The big problem is that, often, the games are labelled "free to download" – which they are. They are not, however, "free to play", and purchases are automatically debited from whatever credit or debit card a user has registered to their account.

Consumer protection
"Misleading consumers is clearly the wrong business model, and also goes against the spirit of EU rules on consumer protection," said EU's justice commissioner Viviane Reding. "The European Commission will expect very concrete answers from the app industry to the concerns raised by citizens and national consumer organisations."

Europe’s “app” industry has grown exponentially in recent years as the use of smartphones and tablets has boomed, but it should be worried now that Reding is on the case. In her previous role as telecoms and media commissioner, she took on the mobile phone companies over their “unjustifiably high” roaming charges and had them slashed within three years.

The problem with in-app purchases in certain games is who is making them. Many of the games are aimed at children as young as four, and, unless a parent is clued in to the dangers, they can end up racking up huge fees to the registered credit card without realising it or without getting the green light of their parents.

John Broxson is an angry man and Angry Birds is to blame. He has two sons, who both love playing Nintendo DS games. "One of our sons wanted to play Angry Birds ," he says. "My wife had previously registered her visa debit card to a Microsoft account on her phone so she could listen to music. She downloaded the app for free. Our son was delighted."

The next bank statement revealed that the child had spent almost €600 on various tokens. “The worst case was on the February 16th, when nearly €300 was spent in 20 minutes [of] game play. As he advanced through the game, pop-ups kept appearing on the screen telling him he needed to get more gold coins to get to the next level of game. He just kept clicking gold coins and they just kept giving them to him.”

When we contacted Microsoft, it arranged for our reader to be refunded in full and stressed that it had safeguards in place to stop little hands running up large bills.

High rents in the Smurf village
This is not an isolated case. In Britain, an eight-year-old girl spent more than €5,000 on treats for her "horse" in a game and on things to decorate the Smurf village. Apple reimbursed the girl's father.

That is a common response from companines: anyone who has a child run up a bill in such a manner usually gets a full refund.

But a refund should not be necessary. It should not be happening at all. "Consumers, and in particular children, need better protection against unexpected costs from in-app purchases," Neven Mimica, the European commissioner for consumer policy, has said.

It is not just in Europe that in-app purchases are proving problematic. In January, the Federal Trade Commission in the US announced a proposed settlement with Apple that will see the company pay about €30 million in refunds to consumers.

Apple was accused of failing to obtain the express informed consent of parents before billing parents’ iTunes accounts for in-app purchases made by children while playing popular mobile games.

Generally, when making an in-app purchase, a user is prompted to enter his or her iTunes password, and in many cases the parent will enter the password on behalf of the child. The FTC found fault with several of Apple’s features for in-app purchases made in child-rated games.

It expressed concern that many such apps were labelled “free” in the App Store and it said Apple had failed to inform parents that, by entering a password, the app could incur unlimited charges for a period of up to 15 minutes. It also found cases where passwords were cached or stored and, when they were, Apple did not display additional password prompts.

Dermott Jewell of the Consumers’ Association of Ireland says app-makers and facilitators “will have to be dragged kicking and screaming to the table” when it comes to reforming their services.

"The simple fact is these in-app purchases are big business and are making the companies big money. A number of checks could be easily put in place if the will was there. They may give refunds to people who have inadvertently run up big bills but they should make that a lot harder to do."


IN-APP PURCHASES : HOW TO DISABLE

Disabling on iPhone
Go to Settings, then General. Scroll down until you see the Restrictions option. Tap the Enable Restrictions button. You will then be asked to create a passcode. Touch the green switch to turn off In-App Purchases.

Disabling on an Android
Open the Google Play Store app. Choose Menu, then Settings. Under User Controls, select the Set or Change Pin option. Android will ask you for a Pin. Type your chosen Pin, tap OK and then re-enter the Pin to confirm. Then tick the box next to Use Pin for purchases.