Are “Unethical” App Subscription Practices Ruining the App Store?

Tech Crunch and Forbes recently reported on a problem plaguing the App Store: unethical subscription practices.

According to Tech Crunch, commonly utilized unethical practices include as follows:

• that the apps are too aggressive in obtaining subscriptions;
• that the apps offer little functionality without upgrading;
• the apps provide no transparency around how free trials work;
• and the apps make it difficult to stop subscription payments.

Both Tech Crunch and Forbes note that the App Store has established published Guidelines for App Store Review, which specifically includes a Developer Code of Conduct that states:

Customer trust is the cornerstone of the App Store’s success. Apps should never prey on users or attempt to rip-off customers, trick them into making unwanted purchases, force them to share unnecessary data, raise prices in a tricky manner, charge for features or content that are not delivered, or engage in any other manipulative practices within or outside of the app.

So, if Apple requires adherence to a code of conduct, why is it alleged that unethical subscription practices are still so rampant on the App Store?  And why hasn’t the Federal Trade Commission (“FTC”)  stepped in, or more state attorney general offices intervened?   It is unclear, since as Forbes argues, the more these practices are allowed to continue, the more the practices are likely to detrimentally affect the entire App Store market.  As both Tech Crunch and Forbes have pointed out, the App Store is full of reviewer complaints about the specific practices of various apps, so at least Apple has definitely been on notice that there was a problem.  Presumably the FTC and at least one or two state attorney general’s offices have been made aware of these issues as well.

As a Silicon Valley SaaS and software licensing attorney, however, I would encourage App developers profiting off practices that seem questionable or are the targets of a significant number of annual complaints to consider modifying those practices as quickly as possible, as you and your business run the risk of not only attracting a lawsuit by the FTC or an attorney general’s office but you also run the risk of attracting a class action suit on behalf of subscribers who were allegedly harmed by your App.  This type of suit is not without precedent, and could come with a significant damage award.   Your subscription terms do matter and they need to be viewed as fair and reasonable to your subscribers.  You are on notice: these practices are being brought under scrutiny by the press and scrutiny by regulators, states, and class action attorneys is likely to soon follow.

Kristie Prinz

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