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Markey Urges FTC to Investigate In-App Purchases

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WASHINGTON, February 8, 2011 – Rep. Edward Markey (D-MA), a senior Democrat on the House subcommittee on Communications, Technology and the Internet, sent a letter to the Federal Trade Commission urging it to investigate suspect practices surrounding purchases made through mobile applications.

These purchases, also called “in-app” purchases, occur when a consumer buys a virtual good, such as within a video game or a smartphone application. Often, these purchases do not require the input of payment information since the device is frequently already linked to a user’s account or phone bill.  Markey became aware of the problem after reading an article in the Washington Post that highlighted one instance where a child purchased more than $1,400 worth of virtual goods within a smartphone game featuring popular cartoon characters, the Smurfs.

“Companies shouldn’t be able to use Smurfs and snowflakes and zoos as online ATMs, pulling money from the pockets of unsuspecting parents.” Markey said. “The use of mobile apps will continue to escalate, which is why it is critical that more is done now to examine these practices.”

In his letter to the FTC, Markey said in part: “I am concerned about how these applications are being promoted and delivered to consumers, particularly with respect to children, who are unlikely to understand the ramifications of in-app purchases”

The full letter can be found here.

Rahul Gaitonde has been writing for BroadbandBreakfast.com since the fall of 2009, and in May of 2010 he became Deputy Editor. He was a fellow at George Mason University’s Long Term Governance Project, a researcher at the International Center for Applied Studies in Information Technology and worked at the National Telecommunications and Information Administration. He holds a Masters of Public Policy from George Mason University, where his research focused on the economic and social benefits of broadband expansion. He has written extensively about Universal Service Fund reform, the Broadband Technology Opportunities Program and the Broadband Data Improvement Act

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