Free-to-Play Games and In-App Purchases; Some Thoughts about Legal Stuff for Developers

There has been a lot of fuzz around the ' freemium ' model and even the legality of it. In addition to the public debate over the issue, the market practices related to free to play ( F2P ) games and free apps with in-app purchases ( IAP ) have been reviewed, at least, by (i) the European Union and the national consumer protection authorities (for details please see the press release and the report ); (ii) the UK's Advertising Standards Authority ( ASA ) in the Dungeon Keeper case (please see the ASA decision ); (iii) the Italian competition authorities (please see the press release regarding the launch of the investigation); and the UK's Office of Fair Trading ( OFT ) in the OFT's principles for online and app based games . Even though these decisions and reports are not laws (lack the legally binding effect), they give some guidance on how the marketing and consumer protection laws should be applied or interpreted in the context of games and apps with IAP.

Much of the fuzz and public discussion around the freemium model has been understandably concentrated on the platform holders, like Apple and Google. They are, of course, the primary gate keepers here but it doesn't end there. It is going to be increasingly important for the developers to pay attention to the legal side of freemium and the platform holders are trying to push things into this direction as well. This can, for example, be seen from the above EU report where Google states that it will draw the attention of game developers world-wide, through the Google Developers Console, to the prohibition on exhortation to children to buy and as a last resort remove the breaching games from Google platforms and even ban the developer from offering apps on Google platforms in case of serious or repeated breaches. In the same report also Apple stated that the burden of compliance with national legal requirements rests with the developers.

What is it then that a developer could do to be in compliance with legislation when marketing and offering F2P games or apps with IAP? Based on the current understanding of things, at least, the following should be taken into account:

No more 'free to play' or 'free' in marketing

Developers should not use the word 'free' alone in any marketing material related to games or apps with IAP. In connection with the EU investigation Google has announced to remove the word 'free' from Google Play for games that are free to download but contain IAP. Also the above Dungeon Keeper decision by ASA (despite the controversies related to the decision) illustrates the ancient legal rule which prohibits the use of the word 'free' if there is in reality some cost involved with the product or service. This is not to say that there needs to be a legal disclaimer in every banner. The point is rather that it should be made clear that the game or app is not entirely free but contains IAP. Advertising can also be considered misleading if the game or app is advertised as free to download but some or many features or characters of the game included in the advertising is actually premium content and subject to charge.

The pricing information provided in the app stores is obviously something that is primarily taken care of by the platform holders. However, it is also in the best interests of the developers to provide the consumers with adequate information of their products and the pricing. Many of the bigger companies already do it and I would definitely recommend for all the developers to include information of the IAP's to the app store description of the game or app. According to consumer protection legislation in most countries the costs and other material information of the products should be given to consumers clearly prior to purchase or download. Think about it this way – if you are buying a toy car, you would probably want to know what it costs and whether the remote control or batteries are included or not. In a similar fashion players should be informed upfront of the existence of IAP and most preferably also about the prices or, at least, the price range of the IAP's. If the IAP's are unavoidable, like after level 10 you need to purchase more levels in order to continue to play, this should be highlighted already prior to installation. The actual purchases are, of course, made within the game or the app and therefore it is equally important to display the pricing information and to clearly highlight the use of real money within the game or app itself. Commercial messages should also be differentiated from the gameplay by making them identifiable and distinguishable.

A lot of the debate over the freemium model has been related to children. As children are more vulnerable for influence, special protection is awarded to children by law in most countries. This makes it increasingly difficult (if not impossible) to make F2P games or apps with IAP targeted to children and the younger the children, the more difficult the task. With the adults it is most likely sufficient to issue adequate pricing and other material information prior to downloading and within the game or app. But with children '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' (OFT principle 6). This kind of requirements need to be taken into account already when designing the game to align the language, presentation, design, structure and other aspects of the game with the age and maturity level of the target audience. This is admittedly vague and we are probably going to see some more guidance from the authorities for this. What is clearer is that direct exhortations to children to make a purchase or persuade others to make purchases for them are prohibited.

The last one should be pretty easy and straight forward. The developers should provide, at least, an email address, company name and address in the game or app to allow consumers to contact the developer. Actually, Google nowadays requires the physical address to be made public with paid apps and apps with IAP.

The discussion around the F2P games and IAP's continues - that's for sure. It remains to be seen that whether there is going to be specific legislation in this regard or whether self-regulatory actions and best practices within the industry are going to be sufficient tools in guiding the market practice towards more consumer friendly direction to the extent that it pleases the army of public authorities wrestling with this hot topic around the world at the moment. Personally, I certainly hope that no specific legislation would be implemented for this and that the possible issues could be resolved in a more lean and simple manner.

For more information of the different aspects of F2P games please see also the videos of the most recent Fondia Gaming Event .