in-app purchase iOS 7

Italy’s Antitrust and Competition Authority is probing Apple, Google, Amazon and Gameloft over accusations that these companies are intentionally misleading consumers who download freemium smartphone and tablets apps without realizing In-App Purchases are needed to unlock more features.

According to a new report, Italian investigators have asked Apple and others to submit their defense within the next twenty days or face a fine of up to €5 million each (about $6.84 million), although the punishment would be proportional to each company’s size…

ZDNet reports:

The investigation, announced late last week, comes after the European Commission asked the “app industry” in February to be more careful in marketing “as free to download games which are not free to play”, particularly when it comes to products that are aimed at children.

It’s likely these moves will have an impact on in-app purchases which, according to figures quoted by the Commission, account for 80 percent of app makers’ revenues.

According to a letter that the Italian watchdog sent to Apple, Google, Amazon and Gameloft, the four companies had offered “misleading and/or incomplete information about the actual costs required for a complete experience of the game”.

As for Gameloft, the French games maker is being accused of sending in-game messages that “incite children to make purchases or to persuade parents to do it”. The Italian authorities also took issue with Google and Amazon’s practice of not requiring users to enter their password each time an in-app purchase is made.

Beginning with iOS 7.1.1, Apple started clearly labeling freemium apps and games which offer in-app purchases, using the ‘In-App Purchases’ label below the Buy button in the App Store. A similar label is also found in iTunes.

iOS 7.1.1 in app purchases

In the past few months, Apple has made a number of other moves in an attempt to address complaints over unwanted purchases.

You can now ask for a refund of unwanted in-app purchases, learn about In-App Purchases via a special link in the App Store and take advantage of a new prompt in iOS 7.1 or later warning you of a 15-minute in-app purchase window.

Authorities in other European countries such as The United Kingdom are similarly investigating in-app purchases in mobile apps and demanding concrete answers from the likes of Apple and Google.

And over in the United States, Apple has agreed to refund users in an FTC settlement over unwanted in-app purchases.

How would you solve this problem?

I would replace the ‘Free’ label on freemium apps with a new one reading ‘Freemium’ and offering an additional, direct link to the App Store section detailing the In-App Purchase mechanism.