App traps: How to avoid tricky in-game purchase offers

Your kids may be spending more than just their free time online.

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When Martin Crawford received a $780 bill for games from Apple iTunes, his eyes almost popped out of his head. “This has got to be a mistake,” he thought. Crawford, a computer-graphics expert in Toronto, looked at the details and realized that his 10-year-old son had bought “bags of gems” while playing DragonVale—a popular free app—on his iPod Touch, and also racked up charges with several other games. “The apps tricked my son by prompting him to buy things while he was in the game,” Crawford says. How? While playing, his son had purchased one bag of gems with his dad’s permission. This required use of a password. After that, he kept buying gems, but because the game didn’t prompt him for a password, he didn’t realize he was spending real money.

Tricky in-app traps are the norm in most games, an exploding industry fuelled by Apple, Google and Amazon—the “Big Three” of app distributors. After a child downloads a free game and starts playing, the app prompts her to buy other things while in the game. These in-app purchases give kids advantages during the game or additional fun components to use, but app developers purposely make the purchasing element vague. Globally, revenue from online and mobile games exploded from approximately $12 billion in 2007 to $30 billion in 2013, and it’s projected to grow to $83 billion by 2016. The Big Three get a cut of this—30 percent in Apple’s case.

One tactic involves allowing you to buy one thing requiring a password, but then providing a window during which you can buy things without re-entering the password. So, when you sign up for iTunes, you must enter a credit card number. When you download a free app and allow your child to buy a $4.99 item (with a password), the app will charge $4.99 to your credit card and, for 15 or 30 minutes after that, allows purchases—even thousands of dollars’ worth—to be made with no password. The Internet is full of horror stories of kids unknowingly spending money in those time frames, but companies refuse to close the windows, saying that parents should set up accounts with restrictions. Other tricks from app developers include vague pop-up boxes and game windows that confuse in-game currency with real-world money. 

Given the variety of mobile devices and the sophistication of apps, many parents make mistakes when setting up parental permissions—or forget altogether. The result? Each year, tens of thousands of parents complain to the Big Three and to government agencies, such as the Office of the Privacy Commissioner of Canada and the US Federal Trade Commission (FTC).

“I don’t think it’s an answer to say it’s up to parents to police their children through automatic-payment financial systems that are created by publishers who target children,” says David Fewer, director of the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC), at the faculty of law at the University of Ottawa. “It’s not enough for companies to say, ‘Well, you can opt into greater safeguards.’ It should be the reverse. Parents should have to opt out of those safeguards.”

Crawford agrees. “Game developers are specifically obscuring the fact that players are spending real money. Their actions and profit strategy are unconscionable,” he says. After a week of back-and-forth emails and phone calls with iTunes, he got 80 percent of his money back, but the company treated him like the problem was entirely his fault. “One tiny mistake during a game led to an astronomical bill,” he says. “The apps should have spending caps. I tried to explain that to them, but they wouldn’t listen. No one at Apple would admit that the in-app purchases were deceptive.”

Some companies did cap selected in-app purchases in 2012 at $20 per purchase in response to a tsunami of public outrage. The caps didn’t satisfy the FTC, and it sued the companies, claiming that they were unlawfully billing parents for millions of dollars in unauthorized purchases. Parents who complained to the FTC stated that even children who could not read were able to “click a lot of buttons at random” and incur unauthorized charges.

The FTC won suits against Apple and Google in 2014. Apple now has to repay $32.5 million to parents, and Google, $19 million—and they’re supposed to provide hassle-free refunds. Amazon, however, is still fighting its case in court.

And you thought apps were all fun and games.

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