Who: Office of Fair Trading
Where: UK
When: 30 January 2014
Law stated as at: 3 February 2014
What happened:
The OFT has responded to the comments on their draft Principles for online and app-based games with children particularly in mind by publishing their final form Principles. Marketinglaw.co.uk discussed the main implications of the draft form of the Principles (published in November 2013) here.
Broadly speaking, the Principles state that consumers should be informed up-front about all costs associated with a game or in-game advertising. They seek to regulate how games publishers use in-app purchases and personal data. The OFT have clarified that in-game payments should not be taken by the game developer unless the account holder, such as a parent, has given their express and informed consent.
Clive Maxwell, OFT Chief Executive, said: “The on-line and apps based games industry has already made significant improvements during our consultation process. But it still needs to do more to protect children and treat its customers fairly … Parents and carers have an important role to help protect their child and their bank balance.” This is a new emphasis on the role of the parent as well as on the games publisher and helps to ensure that the responsibility does not lie solely with the industry.
The Principles
The OFT have suggested 8 Principles for online and app-based games, namely:
- All information on costs associated with a game should be provided upfront;
- All material information about the game should be clearly, accurately and prominently provided upfront;
- The commercial intent of the game should be clearly distinguishable from the gameplay;
- The game should not mislead consumers by implying the payments are required or are an integral part of the game;
- Games should not be aggressive or exploit children’s vulnerability to ensure that they make a purchase;
- The game should not include direct exhortations to children to make a purchase; and
- Payment should not be taken from the account holder unless it has been authorised.
Main changes to the original draft:
- Compliance. The final form Principles acknowledge the fact that games and app companies have to work within the restrictions of each platform’s rules and regulations. For example, the Principles state that platform owners should “… enable games business to comply with the requirements of Principles 1-3″. This is in response to criticism from those within the industry that games publishers had to make a decision between the commercial realities of the Platform Rules and compliance with the OFT.
- “Likely to appeal to children”. There was widespread concern and commentary around the first draft of the Principles about the meaning of the phrase “likely to appeal to children”. For example, the definition of children varies in different jurisdictions. This area is not directly addressed in the updated Principles but the OFT do comment on this, at length, in a separate document. They state that the “upper age” of a child is likely to be anywhere between 12 and 18. Therefore, one can safely assume that anyone aged under 12 will be viewed as a child but the situation is more fluid for those aged 12 to 18. This is likely to give games publishers cause for concern as there is very little clarity and guidance in this area.
- International aspects. Although the OFT’s reach is confined to the UK, it has frequently stated that it views these Principles as a benchmark which will be adopted by its counterparts in Europe and further afield. A number of foreign organisations and consumer agencies have provided responses to the consultation: for example, the consumer agencies of Japan, Sweden and the Netherlands have fed back their views. Therefore the games industry in the UK and beyond is watching these developments with interest to see which way the tide is turning in relation to in-app purchase and the scope of enforcement.
- Legal basis for the Principles. The draft Principles were criticised by many within the games industry for not sufficiently explaining the legal basis for each proposition. The OFT has responded to this by adding an Annex to the final form Principles which explains each Principle’s basis in UK and EU legislation.
- Advice given to parents: The OFT have also issued guidance for parents to help ensure that their children do not make unauthorised in-game purchases. For example, parents are advised to check the “payment options” settings and set up a requirement for a password to be entered for each payment. In addition, parents should consider whether games include in-app purchases or social elements by reading the description on the platform store and could play the game themselves to understand what the children will see and experience.
Why this matters:
Online and App-based games publisher will now have until 1 April 2014 to ensure that they comply with these Principles. Failure to comply could result in enforcement action by the Competition and Markets Authority, who take over in this area from the OFT in April 2014.
Games publishers should consider the Principles and their potential impact on their games. For instance, their introduction could also drive a need for technical changes to games and apps so as to allow games publishers to provide the necessary information prior to a consumer downloading a game.
