by Rebecca Merrett

Consumer council won’t seek more regulation on mobile app downloads

Jul 22, 20135 mins
MobileSmall and Medium Business

The Commonwealth Consumer Affairs Advisory Council (CCAAC) has said it does not see additional regulation as an appropriate way to address key issues faced by consumers when they purchase, download and use mobile apps.

The CCAAC considers that there is already enough regulation that can “provide the right balance between the needs of consumers and industry participants” when it comes to consumer problems, and therefore does not think it’s necessary to add any further regulation.

In its latest report, App purchases by Australian consumers on mobile and handheld devices, CCAAC identified some major issues consumers face when purchasing apps.

These include:

  • Important information regarding billing and in-app purchases that may be absent, incorrect or not easy for users to understand
  • Bill shock and the lack of information around ongoing data use costs associated with the app
  • Difficulty for users to be able to make a complaint or obtain a refund due to app stores that lie outside Australian jurisdictions.

Earlier this year, a number of organisations recommended improvements to the current controls and protections that are in place for consumers when purchasing apps.

Consumer watchdog Choice said that passwords for in-app purchases are “inadequate”.

“The problems with the current system relates to disclosure of in-app purchases and safeguards against unauthorised in-app purchases,” Choice wrote in its submission.

Choice recommended that all games, including in-app purchases, should disclose their costs prominently at the point of sale and a mandatory popup should appear that warns consumers they are buying a game with in-app purchases.

The watchdog also recommended that in-app purchases should have a double opt-in mechanism where a PIN or password is different to the app store password for the account.

“All in-app purchases should require both the app store password and the unique in-app purchase password,” Choice wrote. “All in-app purchases should require a password, with no exceptions.”

The Telecommunications Industry Ombudsman said that the bulk of its complaints around mobile app purchases during 1 July 2012 to 31 December 2012 were the unexpectedly high bills consumers received from a mobile app due to unforeseen data usage costs.

“We received 221 new complaints which concerned mobile apps and, of these, 206 (93 per cent) complaints were about disputed charges resulting from a mobile device using unexpectedly high levels of data,” the ombudsman wrote in a submission.

“Of the 206 complaints involving unexpectedly high levels of data use: 78 occurred because the information provided by data usage app (supplied or pre-installed by a TIO member) was misleading or inaccurate (38 per cent); 25 occurred because a consumer used an incorrect app for accessing ‘free’ social networking services (12 per cent); 10 occurred because of a child using the app (5 per cent).

“There is a potential lack of transparency about the amount of data individual mobile applications use, in particular where the billing arrangements used by service providers for smartphones, bundled data, voice and SMS services. This can result in consumers experiencing unusually high bills through unintentionally excessive data use via mobile applications.”

The TIO recommended app stores should be upfront with consumers about any ongoing data costs from downloading an app. For example, a mobile app could run automatically in ‘background mode’ chewing up a user’s mobile data without him or her knowing.

When it comes to complaints handling and refunds, the Australian Mobile Telecommunications Association recommend that the Cooperative Arrangement for Complaints Handling on Social Networking Sites could be used as a model for the Australian government to engage with app store providers outside local jurisdictions on improving consumers’ experience with mobile apps.

“AMTA recognises that many apps are provided for sale in Australia by companies that are based overseas, do not have an Australia related entity and have not taken steps to put into place consumer protection advice.

“This raises a jurisdictional issue regarding the enforcement of Australian consumer protection laws and regulations.”

The Australian Communications Consumer Action Network recommended that all app store providers should provide external dispute resolution options at the point of sale, as well as information on the refunds process.

The ACCAN also recommended all app stores create a simple, one-step process for consumers to lodge a complaint with the store they made the app purchase.

The ACCAN said many app stores direct users to contact the app developer so the process of tracking down a multi-party supply chain makes it difficult for consumers.

“The Google Play, BlackBerry and Windows app stores tell consumers to lodge app refund requests with the app provider.

“As app providers can be located in any country and may not provide clear contact details, it can be incredibly confusing for a consumer to know how to lodge a refund request with a provider.”

The CCAAC is looking at using the Organisation for Economic Co-operation and Development’s Consumer Policy Toolkit as a framework to address the issues in its report.

To read the full report, click here.