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Posted at 4:23 PM ET, 02/22/2011

FTC to review Apple iPhone in-app purchases

By Cecilia Kang


The Federal Trade Commission said Tuesday it will review the marketing and delivery of mobile applications that charge users for products and services, such as through Apple's iTunes store.

FTC Chairman Jon Leibowitz wrote in a letter to Rep. Ed Markey (D-Mass.) that the practice of "in-app purchases" for certain applications on Apple iPhones, iPads and iPods raised concerns that consumers may not fully understand the ramifications of those charges. The Washington Post wrote about hefty charges amassed by children using Apple device games that public interest groups said should not be included in software geared for children. Some parents said their children didn't understand the difference between real and pretend purchases for items such as $99 barrels of Smurfberries on the Capcom Interactive game Smurfs Village.

"We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases," Leibowitz wrote. "Let me assure you we will look closely at the current industry practice with respect to the marketing and delivery of these types of applications."

An FTC spokeswoman acknowledged the letter but declined to comment further. Apple did not immediately respond to an interview request.

“After the Washington Post first broke this story earlier this month, I sent the Federal Trade Commission a letter calling on the agency to investigate the issue of 'in-app' purchases and provide additional information about the promotion and delivery of these applications to consumers, especially with respect to children," Markey said in a statement. "What may appear in these games to be virtual coins and prizes to children result in very real costs to parents. I am pleased that the FTC has responded, and as the use of mobile apps continues to increase, I will continue to actively monitor developments in this important area."

Separately, the FTC and Justice Department have launched antitrust reviews into Apple's subscription service for publishers, according to The Post's Ian Shapira. The agencies are looking into Apple's dominant position over mobile applications through its iTunes store to see if it is unfairly using its market dominance to pressure buisness partners.

Related stories:

Apple iPhone game makes in-app purchase policy changes after parents' ire

By Cecilia Kang  | February 22, 2011; 4:23 PM ET
Categories:  Apple, FTC  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Chinese government launches search engine
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Posted by: DGSPAMMAIL | February 23, 2011 8:35 AM | Report abuse

This level of extortion should not stand. The FTC needs to look into this soon. Many developers cannot afford to give Apple 30% off the top for doing nothing. Apple gets money from the sale of the devices, and people buy the devices based on the apps available so it already is a win-win financially for Apple. They should not be goughing the developers (which will be passed on to consumers). This is akin to how the Federal Government takes Social Security taxes out of your paycheck before you see it. They think because it is hidden that people are too stupid to know where the hit is coming from. Apple we are paying attention. Please don't become just another Microsoft.

Posted by: moonwatcher2001 | February 23, 2011 11:13 AM | Report abuse

My next phone will be a Droid based one because of this. Apple take notice. Consumers are not amused. Besides, the sales reps at the Verizon store say the Droid based phones are "next gen" and 4G LTE ready compared to the old iPhone.

Posted by: moonwatcher2001 | February 23, 2011 12:52 PM | Report abuse

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