FTC eyeballing Apple’s in-app purchase scheme

Feb 23, 2011
Finance

The Federal Trade Commission said Tuesday it plans to review in-app purchases. FTC Chairman Jon Leibowitz Tuesday told Rep. Ed Markey (D-Mass.) in a letter that consumers may not completely understand in-app purchases for certain applications on Apple’s (AAPL) iPhones, iPads and iPods. The Post broke a story about large charges children have generated because […]

The Federal Trade Commission said Tuesday it plans to review in-app purchases.

FTC Chairman Jon Leibowitz Tuesday told Rep. Ed Markey (D-Mass.) in a letter that consumers may not completely understand in-app purchases for certain applications on Apple’s (AAPL) iPhones, iPads and iPods.

The Post broke a story about large charges children have generated because they did not comprehend the difference between actual and pretend purchases such for Smurfberries on the Capcom Interactive game Smurfs’ Village, said Cecilia Kang in The Washington Post.

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.”

Leibowitz responded: “We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases. 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.”

Apple declined to comment.

The investigation comes on the heels of the FTC and the U.S. Justice Department saying they are looking into possible antitrust issues involved with Apple’s subscription program. The agencies stopped short of calling it an investigation, Ian Shapira said Saturday in The Washington Post. Word of this leaked out as Apple CEO and co-founder Steve Jobs and other Silicon Valley leaders were dining with President Barack Obama last Thursday night.

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In regards to the subscription deal, Apple said it will extract a 30 percent cut from publishers selling content on an iPad or iPhone app. Companies cannot allow consumers to go directly from the app to the company’s web site to find a better deal.

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