The European Commission is going to have a discussion with Apple, Google, and app developers, saying that consumers need to be better protected against unexpected costs from in-app purchases on mobile devices that can rack up bills of thousands of dollars.

According to the Justice Minister of the European Commission, Viviane Reding, and consumer policy commissioner Neven Mimica, who are going to lead meetings, they want to bring attention to whether it is misleading to classify games as free if they imply in-app purchases to make progress.

The European Commission believes that consumers and especially kids need better protection against unexpected costs from in-app purchases. It pointed out that misleading consumers is undoubtedly the wrong business model, going against the spirit of EU rules on consumer protection. This is why its representatives expect very concrete answers from the app industry to the concerns raised by consumers and various consumer groups.

For example, in the United Kingdom, the Office of Fair Trading investigated in-app purchases in games last year. They found out that after 5 months app developers offered little change. Everyone understands that the games app business is booming now, and the experts estimate the whole app business will worth about €63 billion within the next 5 years. At the moment, over 50% of online games in the European Union are advertised as “free”, while some of them carry hidden costs. In the meantime, games developers also react to consumers’ increasing reluctance to pay upfront for games. Such reluctance has driven down advertised prices and encouraged the use of pricey IAPs in games for kids and teenagers, where purchases are charged against an adult’s credit card.

The European Commission claims that the results can be dramatic. For instance, Apple was sued in the United States by a group of parents who complained their kids had run up huge bills via such in-app purchases. The tech giant recently settled the case with a payout of around $600 million. In the United Kingdom, two parents also managed to get a refund after their child spent £980 on virtual donuts in a Simpson’s game. Earlier, another kid ran up a bill of £4,000 from games like My Horse and Smurfs’ Village, and Apple also had to refund her dad.

Ilkka Paananen, the CEO of the Finnish game giant Supercell, a very profitable maker of such hits as Clash of Clans, said the developers do welcome the EC discussions as the very important for the future of the game industry. Indeed, for many game creators, the use of in-app purchases has become essential. The app testing company Swrve revealed that just 1.5% of gamers spent any money at all, while half of the total spending came from 0.15% of the total players.

The move of the European Commission comes after concerns were raised by consumer groups in a range of countries, including Denmark, Britain, Italy and Belgium, about the prevalence and cost of in-app purchases. Despite the fact they can be disabled on any device, they are still on by default. The proposals of the European Commission include clearer explanations in games about the costs involved, along with removing inducements to make purchases like “Buy now!” and “Upgrade now!” and preventing payments being processed without explicit consent.

In-app purchases are a great way for developers to monetize their projects. I prefer this for the mobile games I choose.

On the other hand, I read a story of a toddler racking up over a thousand bill after a moment spent on her dad's ipad! LOL

Nevertheless, I think they should give regulation a rest and let innovation thrive at this early stage.