Last week, we reported that antitrust regulators are reviewing Apple’s controversial new subscription policy. Now, the feds are scrutinizing the world of apps for an entirely different reason-kids are racking up massive app bills. The Washington Post published an article earlier this month describing how an 8-year-old girl who spent her winter break dressing up her “simple mushroom home” in the game Smurfs’ Village ended up sticking her parents with a $1,400 cell phone bill. The in-app purchases were so easy and quick, the child didn’t realize she was spending real money. Lawmakers wrote to FTC Chairman Jon Leibowitz the next day, and today he responded.
The Post published a portion of Leibowitz’s letter, which read: “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.”
Since Leibowitz is the kind of guy with the power to actually do something about this, you can be sure Apple (NSDQ: AAPL) is paying attention, although it didn’t immediately respond to The Post‘s interview request.
The original article on the overspending issue notes that seemingly child-friendly apps like Smurfs’ Village have become some of the most lucrative enterprises in the app economy. How do they do it? By charging $99 for a wagon of Smurfberries or $19 for a bucket of snowflakes. 8-year-old Madison’s mother called that “preying on children.” The Post story follows a November Associated Press article on the same topic; it also focused on the Smurfs’ Village game, with some parents calling it a “scam.”
The total market for mobile apps is estimated to be around $2.2 billion and is continues to be dominated by Apple, despite recent gains by Android and Research In Motion.