FTC investigates Apple's in-app purchases

Posted by Emma Woollacott

The Federal Trade Commission has confirmed that it's looking into Apple's controversial app marketing policies - but not because of their effect on content providers.

It's responding instead to a letter from congressman Ed Markey expressing concern that children in particular are being encouraged to make in-app iTunes purchases, ramping up their hapless parents' bills.
Many apps, while themselves free to download, then enable the provider to charge for products and services, with Apple taking a 30 percent cut.

"I am concerned about how these applications are being promoted and delivered to consumers, particularly with respect to children, who are unlikely to understand the ramifications of in-app purchases," he wrote.

In one case, he says, a parent was landed with a $1,000 bill for game accessories.

FTC chairman Jon Leibowitz has now promised to investigate the issue, saying he 'fully shares' Markey's concern.

Apple extended the ability to make in-app purchases to free apps late in 2009. But with the feature available in childrens' games such as Smurfs’ Village and Tap Zoo - targeted at kids as young as four - many feel it's just too easy for enthusiastic little gamers to rack up hefty bills without realizing that those Smurfberries cost real, hard cash.

Apple's app policies - and in particular its App Store subscriptions - are already under investigation by both the FTC and the Justice Department, which are concerned that the company's market dominance gives it too much sway over its business partners.