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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

SimplifiedLaw.co.nz
consumer

In-app purchases and unauthorized kids' spending: Can you get a refund?

Key Takeaway

Consumers in New Zealand may have rights regarding in-app purchases and unauthorised spending, particularly by children, under the Consumer Guarantees Act 1993 and the Fair Trading Act 1986. These laws address the quality of goods and services, and prevent misleading or deceptive conduct by traders, which can be relevant to seeking refunds for such transactions.

In-App Purchases and Unauthorised Spending: Can You Get a Refund in New Zealand?

In-app purchases are items or features bought within a mobile application (app) or game, often using real money. The issue of unauthorised spending, particularly by children, on these purchases can raise questions about consumer rights and potential refunds under New Zealand law.

The Consumer Guarantees Act 1993 (CGA)

The Consumer Guarantees Act 1993 (CGA) provides a set of guarantees to consumers when they purchase goods or services from a supplier in trade. A consumer is generally defined as a person who acquires goods or services primarily for personal, domestic, or household use [Source: Consumer Guarantees Act 1993, s 2]. Goods can include software and digital content [Source: Consumer Guarantees Act 1993, s 2], and services include things like providing access to platforms or facilitating transactions.

Key Guarantees under the CGA that may be relevant:

  • Acceptable Quality (for goods): Goods, including digital items purchased in-app, must be of acceptable quality [Source: Consumer Guarantees Act 1993, s 6]. This means they must be fit for all purposes for which goods of that type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable [Source: Consumer Guarantees Act 1993, s 7(1)]. If an in-app item is fundamentally flawed or doesn't work as described, this guarantee might apply.
  • Reasonable Care and Skill (for services): Services, such as the provision of the app platform or payment processing, must be carried out with reasonable care and skill [Source: Consumer Guarantees Act 1993, s 28]. If the service facilitating the in-app purchase system is deemed to have been provided without reasonable care and skill (e.g., inadequate security measures that lead to unauthorised purchases), this guarantee could potentially be breached.

If a product or service fails to meet one of these guarantees, consumers may be entitled to a remedy, which can include a refund, repair, or replacement, depending on whether the failure is minor or substantial [Source: Consumer Guarantees Act 1993, s 18, s 32].

The Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 (FTA) is designed to protect consumers from misleading and deceptive conduct, and unfair trading practices by traders (persons carrying on a business) [Source: Fair Trading Act 1986, s 2]. This Act is often highly relevant in cases of unauthorised in-app purchases, particularly those made by children.

Key Provisions under the FTA that may be relevant:

  • Misleading and Deceptive Conduct: A trader must not engage in conduct that is misleading or deceptive, or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This is a broad prohibition. If an app's design, interface, or description of the purchase process is unclear, confusing, or encourages spending without adequate parental controls or warnings, it could potentially be considered misleading or deceptive.
  • False or Misleading Representations: Traders must not make false or misleading representations about goods or services [Source: Fair Trading Act 1986, s 13]. This could apply if the features or costs of in-app purchases are misrepresented.
  • Unsubstantiated Representations: If a trader makes a representation about a good or service without reasonable grounds for making it, they may be breaching the FTA [Source: Fair Trading Act 1986, s 12A].

Remedies under the FTA:

If a breach of the FTA occurs, a court can make various orders, including declaring a contract void, varying a contract, ordering a refund, or awarding damages to the consumer [Source: Fair Trading Act 1986, s 43].

Unauthorised Spending by Children

When a child makes an in-app purchase without parental consent, the central question often revolves around whether the trader (the app developer or platform provider) has engaged in misleading or deceptive conduct under the FTA, or failed to provide a service with reasonable care and skill under the CGA. Factors considered may include:

  • The clarity of the purchase process and warnings.
  • The effectiveness of any parental control features offered or advertised.
  • Whether the platform's payment authorisation system could be easily circumvented by a child.
  • The age and understanding of the child involved.

While the Contracts and Commercial Law Act 2017 governs contracts with minors (individuals under 18), and generally allows a minor to cancel contracts, the primary legal avenue for a parent seeking a refund for unauthorised spending by their child typically focuses on the conduct of the trader under the FTA, and potentially the quality of service under the CGA, as the parent is the one whose funds were used without their consent or due to potentially misleading practices by the trader.

Consumers should first attempt to resolve the issue directly with the app developer or platform provider, such as the app store where the purchase was made.

When to Seek Independent Legal Advice

For specific situations involving disputes over in-app purchases or unauthorised spending, it is advisable to seek independent legal advice. Information on legal rights and obligations can be obtained from official government bodies such as the Commerce Commission or through legal professionals. Free legal help is available through Community Law Centres.

Key Resources