Consumer advisory council warns against more app store regulation

The Australian Commonwealth Consumer Affairs Advisory Council has shied away from proposing further regulation of app markets.

The Commonwealth Consumer Affairs Advisory Council (CCAAC) has suggested that app developers and app stores such as Apple's App Store and Google Play could make it easier for customers to obtain a refund for accidental purchases or change of mind. However, the council has recommended against further government regulation at this stage.

In response to a spate of media reports late last year over parents left with massive bills due to their children buying apps or making in-app purchases without permission, Assistant Treasurer David Bradbury asked the CCAAC to look into whether Australian consumer protection laws were strong enough to resolve these issues.

In the report (PDF) produced by the CCAAC, released on Friday, chairman Colin Neave stops short of calling for more regulation, noting that while in some instances, it may be difficult to obtain a refund from international developers who operate outside of Australia's jurisdictions, for the most part, the existing regulation in conjunction with the app stores themselves usually offer a means for consumers to obtain refunds.

Customers are warned prior to the purchase of an app that they will be charged, and in Google Play, there is a short window of time in which a customer can obtain a refund for an accidental app purchase. Apple has also implemented a change in its App Store to note when an app includes in-app purchases.

In addition to this, the CCAAC noted that mobile devices commonly have settings and controls that allow users to restrict app purchases and in-app purchases.

But there is room for improvement. Under Australian Consumer Law, it is the supplier that is responsible for remedying a failure to satisfy a consumer guarantee, meaning that in the app ecosystem, it is the app store, rather than the developer. The CCAAC's survey found, however, that people look equally to the app store and the app developer to resolve issues. The CCAAC also found that there were a variety of different government agencies approached by customers when encountering problems with their app purchases. However, the jurisdiction for each agency varies greatly.

The CCAAC has recommended that all stores have a refund window, and should only allow apps with in-app purchases when the developers have proven that they have a clear and satisfactory process for refunds. The council also recommended that customers only be referred back to the developer for a refund in the case of a change of mind.

The council found that because of the review system in place in app markets such as Apple's and Google's, it is ultimately in the interest of developers to keep their customers happy.

"App markets are exposed to the same kind of incentives that exist in physical goods markets (such as a desire to improve reputation)," the report noted. "Consumers are able to avoid apps that are unlikely to be suitable to their needs by using a credible app store and relying on that store's customer ratings, content ratings, and user feedback.

"While this may not resolve all of the issues considered in this review, they remain effective for connecting users with suitable apps."

Although the CCAAC suggested that the Australian government review the market again in a few years, it recommended against any additional regulation at this point.

"Overall, CCAAC is satisfied that a consumer who is familiar with existing protection features and app store reputation mechanisms is able to avoid negative experiences by exercising appropriate and due diligence."

The CCAAC has advised the Australian Competition and Consumer Commission (ACCC) to look at working with government agencies both in Australia and across the world, as well as with the industry in general to look at the development of industry best practices for app marketplaces.

Bradbury said on Friday that he had referred the findings of the report to the ACCC to look at the educational and enforcement activities that it may be required to implement.