FTC settles with Tapjoy over allegations it misled users about in-game rewards

The Federal Trade Commission today announced that it has reached a settlement with mobile ad company Tapjoy over allegations it was misleading users about the in-game rewards. 

FTC said that “Tapjoy, which earns commissions from third-party advertisers, “deceived” consumers by failing in many instances to provide the reward it promised even after consumers completed the activities including purchasing a product, signing up for a free trial, providing their personal information like an email address, or completing a survey.” 

These offers would appear on an “offerwall” where Tapjoy displays third-party advertisements. Tapjoy promised consumers that, by completing the instructions associated with these advertisements, consumers could “earn” their in-game rewards. 

The FTC, however, alleged that the company received hundreds of thousands of complaints from consumers who said they never received their promised rewards. Many consumers complained that they spent a significant amount of money completing various Tapjoy offers or revealed sensitive personal information, such as their medical history or contact information, but still didn’t receive the promised rewards.

“Tapjoy promised gamers in-app rewards for completing advertising offers made by its partners, but then often didn’t deliver,” said Frank Gorman, Acting Deputy Director of the FTC’s Bureau of Consumer Protection. “When companies like Tapjoy make promises that depend on their partners’ performance, they’re on the hook to make sure those promises are kept.”

FTC said Tapjoy was aware of these problems and didn’t take action to address them. Instead, the mobile advertising company “ implemented policies to discourage consumers from complaining, such as prohibiting consumers from submitting a complaint within 24 hours of completing an offer.” it alleged. 

As a result of the ruling, Tapjoy will have to conspicuously display the terms that explain how rewards are earned. The company also will be required to monitor its advertisers to ensure they are following through on promised rewards, investigate complaints from consumers who say they did not receive their rewards, and discipline advertisers who deceive consumers.

The FTC said that if the terms of the settlement are not met, up to $ 43,280 civil penalty will be imposed for each violation.

Commissioners Rohit Chopra and Rebecca Kelly Slaughter said in a joint statement that “Tapjoy is not the only platform squeezing developers. In fact, the firm is a minnow next to the gatekeeping giants of the mobile gaming industry, Apple and Google. By controlling the dominant app stores, these firms enjoy vast power to impose taxes and regulations on the mobile.”

They said: ““By controlling the dominant app stores, these firms enjoy vast power to impose taxes and regulations on the mobile gaming industry, which was generating nearly $70 billion annually even before the pandemic. We should all be concerned that gatekeepers can harm developers and squelch innovation.”