In-App Purchases: the classic game of bait-and-switch, now available on Google Play

by Maddie Davis April 12 2014, 20:51

In February, a New York mother of a five-year-old boy did what many busy parents do to keep their kids occupied: she gave him a game.1

This particular game, Marvel’s “Run Jump Smash”, was on her tablet.2 She purchased the game for 99 cents at the Google Play Store, but in the 30 minutes following that purchase, her son accrued $65.95 in charges to her debit card for “game currency.” 3 The game did not ask for the mother’s password in order to make the charges; Google required a password in order to make the initial purchase of the game, but for 30 minutes after that, a user can make as many subsequent purchases as he or she likes, unfettered by a password or other controls.4

The mother has now filed a class action suit against Google on behalf of other parents unknowingly charged by in this “in-app purchase” scheme.5 Many are justifiably calling these gaming apps – which are free or very cheap to download, but then lures the user into make purchases while using them – “bait apps,” after the classic “bait-and-switch” sales tactic.6 The $65 charge representing the Google class action is small change compared to some cases. One parent reported $2,600 in charges after her daughter played “Tap Pet Hotel”.7 Unfortunately, Google is not the only tech company that has allowed this ploy to impact consumers.

Apple is Google’s top competitor in the app world, and faced a practically identical class-action lawsuit and FTC investigation for the exact same issue.8 The FTC said they had received tens of thousands of complaints about unauthorized charges by Apple as the result of in-app purchases.9 Apple eventually settled for $5 million and issued $32.5 million in refunds.10 Facebook faced a similar class-action lawsuit for unauthorized Facebook Credit purchases made by children.11

Until the February lawsuit was filed, Google had avoided scrutiny in the United States. The European Commission invited Apple, Google and European consumer protection agencies to a meeting last month to discuss concerns about in-app purchases and ask the companies for solutions.12 The European Union Justice Commissioner stated that she believes these apps mislead consumers and encroach upon their consumer protection rules.13

Parents in these cases have an obvious legal defense when minor children make unauthorized, in-app purchases. Generally, individuals under 18 years old can only incur voidable contractual duties.14 But aren’t bait apps questionable on other grounds, as applied to infants and adults alike?

Misrepresentation may provide an enlightening legal framework for the bait app issue. A misrepresentation is defined as an assertion that is not in accord with the facts.15 Surely, labeling these apps as free or low-cost is not completely honest. It is, at the very least, misleading. The fact is that those attractive costs advertised to consumers only apply to the download – bait app games are, undeniably, not free or low-cost if one actually wants to play them.

While bait apps eventually tell the consumer about the hidden costs, it is likely that an app’s initially advertised price (free or a few cents) induced the consumer to download it. If parents had known that the app contained opportunities for their children to rack up credit card debt, they likely would not have downloaded it to begin with, in order to avoid that risk.

Further, failing to tell consumers about the costs of using the apps is equivalent to a non-disclosure on Google’s part. For the purposes of misrepresentation, a person’s non-disclosure of facts known to him is equal to an assertion when the other person is entitled to know the fact because of a relation of trust and confidence between them.16 Giving a company your debit or credit card number, and the ability to withdraw funds, requires a certain amount of trust and confidence in the business. Google demands testing and compliance of all apps sold on Google Play.17 As well-known as the company is, consumers should be able to trust it with their financial information.

While most adults will likely notice and avoid bate-app charges before they are incurred, the fact remains that the tactics app developers use walk an ethical line. Using games to target children for in-app purchases is taking unfair advantage of parents who turn their backs, even if only for a few moments. Developers knew that small children would play games such as “Run Jump Smash” and “Tap Pet Hotel”, and that this young audience does not yet possess the mental capacity to make responsible spending decisions, or even realize they are spending real money.

When it comes to Google’s bottom line, ridding itself of this unethical practice would make good business sense as well. Dealing with consumer complaints and refunding money to outraged parents must cause more headaches than a 99-cent app is worth. As with any business, protecting your customers and establishing trust ensures they will buy from you again and again. If retailers can require that customers enter a PIN number every time they make a debit card purchase, tech businesses can easily require similar security measures during their transactions.

Overall, the misleading qualities of in-app purchases make them both legally and commercially unsound. Google should have learned from its already-burned competitors and fixed the problem before more unhappy parents decided to take the issue to court. Moving forward, tech companies like Google must remember that gaining consumer trust is just as important in their industry as in any other. This notion must guide every business decision they make, even if it is only worth 99 cents.

 

1.      http://gigaom.com/2014/03/10/mother-sues-google-over-kids-apps-after-5-year-old-son-buys-65-worth-of-virtual-currency/

2.      Id.

3.      Id.

4.      Id.

5.      Id.

6.      Id.

7.      http://www.theregister.co.uk/2014/03/17/google_in_app_purchases_play_store_update/

8.      In re Apple In-App Purchase Litig., 5:11-CV-01758 EJD, 2013 WL 1856713 (N.D. Cal. May 2, 2013)

9.      “Letter to FTC”, 2014 WL 587860 (F.T.C.), 1

10.  http://www.theregister.co.uk/2014/03/17/google_in_app_purchases_play_store_update/

11.  http://www.huffingtonpost.com/2012/04/24/facebook-suit-mother-class-action-credits_n_1449648.html

12.  http://www.reuters.com/article/2014/02/27/eu-consumers-apps-idUSL6N0LW2QF20140227

13.  Id.

14.  Restatement (Second) of Contracts §14 (1981)

15.  Restatement (Second) of Contracts §159 (1981)

16.  Restatement (Second) of Contracts §161 (1981)

 

17.  http://gigaom.com/2014/03/10/mother-sues-google-over-kids-apps-after-5-year-old-son-buys-65-worth-of-virtual-currency/

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