The range of apps targeting children is ever-increasing. But not every app is free and some parents have been shocked to discover that their offspring have run up huge bills buying in-game currencies. Dan Smith and Jason Stephens of Wragge Lawrence Graham & Co LLP look at two landmark adjudications from the UK's Advertising Standards Authority ('ASA'), which together send a warning to app developers.
Online and app-based games can entertain, educate and inspire. However, there have been concerns that they are being used to induce children into making purchases within apparently free games. Stories of children racking up significant bills have become increasingly common in the media. The Competition & Markets Authority ('CMA') recently took action against two such games by raising complaints with the ASA.
The CMA raised complaints against Mind Candy, which owns the game Moshi Monsters, and 55 Pixels Limited, which developed the game Bin Weevils. Moshi Monsters has over 80 million registered users across 150 countries and Bin Weevils won the BAFTA Award for Best Children's Website four years running between 2011 and 2014. In August, the ASA upheld both complaints1 2 on the grounds that the games put pressure on children to make in-game purchases, in breach of the non-broadcast code of advertising standards ('CAP Code'). Both Moshi Monsters and Bin Weevils allow players to take part in free activities that involve looking after virtual creatures. In Moshi Monsters, there is a virtual in-game currency known as 'Rox' that is earned by playing minigames.
In Bin Weevils, in-game currencies called 'Mulch' and 'Dosh' can be collected, purchased with real money or received as a benefit of paid-for membership. Certain activities in both games are only available to paying members. Where member access was required, Moshi Monsters' users were presented with text such as 'MEMBERS GET MORE MISSIONS AND UNIQUE MOSHLINGS,' 'JOIN NOW,' 'The Super Moshis need YOU' and 'Members are going to be super popular.'
In Bin Weevils, users were presented with text such as 'BIN TYCOON MEMBERS ONLY! ADOPT THE PERFECT BIN PET! JOIN NOW.' In the 'Dosh ATM' area, users were presented with questions and answers, which stated 'What Can You Spend Dosh On? EXCLUSIVE NEST ITEMS BRILLIANT BUNDLES BINCREDIBLE BIN BOTS AMAZING HATS' and 'How do I get Dosh? BIN TYCOON Become a Member DOSH Top Up.'
The ASA ruled that the 'JOIN NOW' message in Moshi Monsters "was phrased as a command instructing the player to immediately subscribe to the membership scheme." The ASA further considered that phrases such as 'The Super Moshis need YOU' and 'Members are going to be super popular,' "put pressure on young players to purchase the subscription."
In the Bin Weevils adjudication, the ASA stated that phrases such as 'DOSH Top Up' represented a "command to purchase the currency" – the "imperative phrasing" of 'Top Up' went further than simply explaining how a user could engage with the paid-for membership scheme. For those reasons, the ASA concluded that both games "presented children with direct exhortations to purchase membership subscriptions and ingame currency and therefore breached the [CAP] Code."
The ASA clearly considered the two complaints together, publishing both decisions on the same day. Both upheld complaints turn on the use of language that appears to command and/or pressure children into making ingame purchases. Wording such as 'Members are going to be super popular' might be interpreted by some as particularly worrying - playing on a child's desire to fit in and 'be cool' in order to drive paid for subscriptions.
Both Mindy Candy and 55 Pixels Limited did engage with the ASA and altered the wording in their games to reflect the concerns. However, the ASA is clearly looking to send a message to the market. In 55 Pixels Limited's response to the Bin Weevils complaint, it stated that it benchmarked its approach against other leading children's online games and provided screenshots to prove it. So it seems very likely that many other online and app-based games targeted at children may be breaching the CAP Code in a similar way.
What obligations are imposed on the app-based games industry to ensure it acts in a responsible manner?
The CAP Code contains a series of provisions intended to protect children from irresponsible advertising. Amongst these provisions are rules stating that advertisers must not include a 'direct exhortation to children to buy an advertised product' and that 'marketing communications that contain a direct exhortation to buy a product via a direct-response mechanism must not be directly targeted at children.'
Direct response mechanisms cover payment systems that involve no face-to-face contact with the marketer (such as those found in apps). Although these rules are not aimed at digital media in particular, the popularity of apps and the ability to target children away from close parental supervision makes them particularly relevant.
There are also more general rules obliging advertisers to act in a socially responsible manner. In bringing Moshi Monsters and Bin Weevils to the attention of the ASA, the CMA was following up on work monitoring the children's app-based games market, including an investigation launched by its predecessor, the Office of Fair Trading ('OFT').
Following that investigation, the OFT published a set of eight principles, summarising the industry's obligations under consumer protection law3. As children's apps continue to be under the regulatory spotlight, developers would be wise to review these principles, and to seek specialist advice on compliance, at the planning stage and throughout the development process. Otherwise, they may face complaints and the associated bad PR, along with potentially substantial redevelopment costs.
The OFT's principles are:
- Information about the costs associated with the game should be provided clearly, accurately and prominently up-front, before the consumer begins to play, download or sign up to it or agrees to make a purchase;
- All material information about a game should be provided clearly, accurately and prominently upfront, before the consumer begins to play, download or sign up to it or agrees to make a purchase;
- Information about the game business should be provided clearly, accurately and prominently up-front, before the consumer begins to play, download or sign up to it or agrees to make a purchase;
- The commercial intent of any in-game promotion of paid-for content, or promotion of any other product or service, should be clear and distinguishable from gameplay;
- A game should not mislead consumers by giving the false impression that payments are required or are an integral part of the way the game is played if that is not the case;
- Games should not include practices that are aggressive, or which otherwise have the potential to exploit a child's inherent inexperience, vulnerability or credulity or to place undue influence or pressure on a child to make a purchase;
- A game should not include direct exhortations to children to make a purchase or persuade others to make purchases for them; and
- Payments should not be taken from the payment account holder unless authorised.
What guidance is available for parents and carers?
The CMA also provides helpful advice to consumers. In June this year, the CMA published its three top tips for parents and carers:
- Check device purchase settings and don't share passwords;
- Before downloading a game for your child check the description and any applicable payment arrangements; and
- Check your bills to see if any in-game purchases have been made and if they have, contact the game operator.
With the MoshiMonsters and Bin Weevils adjudications, the ASA has clearly set out its stance on online and app-based games aimed at children, firing a warning shot across the bows of the rest of the industry.
Language appearing to command or pressure children into making in-game purchases is likely to breach the CAP Code and also potentially UK consumer protection law more generally. The regulators are playing an active role - no longer can app developers rely on the fact that children are unlikely to put in complaints.
The industry should sit up and take note - not only to avoid regulatory issues but to preserve and enhance reputation and foster trust with parents.
This article, written by director Dan Smith, was first published in the October 2015 issue of E-Commerce Law & Policy.