Apple in in-app games lawsuit

policies, reports PC Mag.com.

Despite the fact that Apple now requires users to enter passwords before making in-app purchases, Garen Meguerian says minors can still easily make purchases on their parents' accounts.

Meguerian's nine-year-old daughter racked up about $200 in in-app purchases while playing games like Zombie Caf'e, Treasure Story, and City Story. Meguerian says he was “completely unaware” that these games included an in-game currency and was shocked to find the charges on his account.

Apple's in-app purchase policies got attention when lawmakers asked the Federal Trade Commission (FTC) to examine in-app purchases and determine whether or not consumers were being unfairly charged.

They pointed to a Washington Post article that discussed an eight-year-old who spent $1 400 in in-app charges via Capcom's Smurfs' Village game. Capcom later agreed to post a warning about in-app purchases.

The FTC says it's examining the issue, but Apple's iOS 4.3 fixed the problem for App Store apps; and Google added in-app billing to Android apps in late March.

PCWorld states lead attorney Jonathan Shub of the Philadelphia law firm Seeger Weiss calls in-app purchases of game currency a “bait and switch” that preys on children.

He says: “Many games are, by design, highly addictive, and are developed strategically to induce purchases of game currency. For example, the game Smurfs' Village is free to download.

“The object of the game; however, is to build a virtual village, and the construction process is greatly sped up by the purchase of 'Smurfberries', game currency that costs real money.”

According to Huffington Post, the suit comes at a time where the profitability of such virtual games seems poised to explode.

A survey by Urban Airship predicts that in-app purchasing would rise from 8% in 2010 to 31% in 2011. Further, research firm Distimo discovered that 34% of revenue generated by the top 100 apps comes from 'freemium' apps, despite the fact that less than 2% of all apps follow such a model.