In-App Downloads Still a Problem for Parents
The news that Apple agreed to refund $32.5 million in charges incurred by children using mobile apps will come as some comfort to parents who have been on the wrong end of these unexpected expenses but it hardly marks the end of the problem.
The FTC sued Apple after receiving “tens of thousands” of complaints from consumers over unauthorized purchases through apps such as Dragon Story and Tiny Zoo Friends. The refund comes on the heels of a separate agreement reached last June, which required Apple to pay $100 million to settle a class action lawsuit over much the same issues.
Unauthorized in-app purchases have been a problem ever since the App Store opened back in 2008. Parents, who happily handed over their iPhones to their younger children to keep them entertained, would suddenly be confronted by hundreds – and in some cases, thousands – of dollars’ worth of charges on credit cards linked to their iTunes accounts.
Many mobile games designed for younger kids are classic bait-and-switch arrangements, which would widely be considered false advertising in the ‘real’ world. These ‘freemium’ games are free to download but unlocking anything worthwhile in the game requires a series of ever more costly purchases.
The UK web site Pocket Gamer last year published an article on the most expensive in-app purchases on iOS and Android games and listed items ranging from a pony costing $70 to a virtual machine gun for the princely sum of $688. (Yes, you read that correctly!)
Instead of clamping down on these misleading and costly apps, Apple has generally looked the other way and it’s easy to understand why. Market analyst Distimo last year reported that the percentage of Apple’s $10 billion a year App Store revenue generated by in-app purchases had reached a staggering 76 percent, a figure that is sure to trend even higher in years to come.
While popular ‘adult’ games like Candy Crush and Big Fish Casino account for much of that revenue, a significant amount is generated from games squarely aimed at younger kids. In the FTC complaint, critics focused on the length of time that kids had to make in-app purchases once a parent had initially downloaded a game. Instead of the download being the end of the commitment, the parent’s account remained open for an additional 15-minute window, during which kids could make additional purchases without the need to re-input a password.
“To be clear, the issue is not that Apple opens a 15-minute window for in-app purchases,” said FTC chairwoman Edith Ramirez. “What we challenge is the fact that Apple does not inform users of the existence of the window. When parents enter a password, they do not know the full scope of charges they could incur.”
As well as the refund payment, the settlement requires Apple to change its billing practices to ensure it obtains consent from parents before charging for all in-app spending. It’s likely that all apps will get new disclosures, although the wording of those disclosures has not been finalized.
You can click here to learn more about in-app purchases. The type of in-app purchases and the way they work are the same for both iTunes and the Google Play store. If you have an iPhone, you can always disable in-app purchases through Restrictions, which you can activate through Settings.
You can also set up a separate iTunes allowance for your child, which effectively caps their monthly spending. However, don’t be surprised if the allowance is used up rather quickly – those cute pets and diamonds don’t come cheap!