Counting the cost of in-app purchases

Posted: August 8, 2013 in Uncategorized

It’s so easy these days to download music, movies, books and games. However, it’s just as easy to forget about some of the pitfalls – especially as a parent.

Recently I was self-righteously shaking my head at the story about Canadian parents whose 7-year-old twins bought $3,000-worth of in-app purchases on iTunes while playing the hugely popular game Clash of Clans. How could they let that happen? A week later I was shaking my head in disbelief when our credit card statement showed that our 10-year-old had racked up almost $500-worth of in-app purchases for the same game in just four days!

Click and easy: in-app purchases for Clash of Clans range from 99c to $99.

Click and easy: in-app purchases for Clash of Clans range from 99c to $99.

This is mere chicken feed for Supercell, the game’s Finnish developers, which reportedly rakes in a staggering $2.4 million a day from in-app purchases from the only two games it has in the market – Clans and Hay Day, played by an estimated 8.5 million people daily.

So how did our little spending spree happen? We’re a pretty tech-savvy family and heavy iTunes users (no, you really don’t want to know how heavy), and I thought we had taken precautions to stop things getting out of hand. We set up our teenaged daughter with her own account that can only be sustained by iTunes gift cards. Until he is a little older, we allowed our son to use our family account on his iPod but adjusted the settings so that he had to ask us for approval and to put in the top secret password for him whenever he wanted to purchase anything. Any purchases were then duly deducted from his pocket money.

Up until last month this had worked fine but, as I found out to my cost, I had not made one crucial change to the settings, which was to require the password for every purchase. As I had set it up, once logged in to our iTunes account, any subsequent purchase during that session (i.e. until the user has logged out or turned the device off) did not require the password. As a result my son simply didn’t think the charges applied as

The other problem was that Clash of Clans, while being a “free” game to download initially, is what is known as a “freemium” game as it requires you to purchase various extras to progress to different levels. In my son’s case it was bags of gems ranging from 99c to a whopping $19.99. Thankfully he didn’t click on other extras that can reach an eye-watering $99. Naturally these enticing add-ons just require a finger tap and although the prices are clearly marked, it doesn’t always register with very young users that this is actually real money they are spending. My son was mortified when I sat him down and explained what had happened.

Admittedly, given my background I should have known better. Still, I thought it might be worth a grovelling plea to Apple. Maybe they might take pity and send us a $25 iTunes card or something. ‘Stacey’ at Apple got back to me within 24 hours and once I had sent them details of the specific purchases (there were almost 40 of them!), agreed that these were not out of character with our purchase history and credited our account for the full amount. It was, they said “an appropriate exception to the App Store Terms and Conditions, which state that all sales are final”. The whole thing was settled in two days.

Indeed, Apple turns out to be surprisingly sensitive to this issue – not least, I expect, because they are in the middle of a class-action lawsuit involving 23 million parents  over iTunes charges made by their children without their knowledge. In a notice to parents about the action, Apple says users can apply for refunds if purchases were made by minors without their authorisation or approval for games with an age rating of 4+, 9+, or 12+ that offer in-app purchases.

Unauthorised purchases up to $30 may qualify for a $5 iTunes credit while spending sprees over $30 during a 45-day period may qualify for a full credit. Given that app developers make an average of $60,000 from in-app purchases, industry experts think the lawsuit could cost Apple north of $100 million. Supercell, the Finnish company that makes Clash of Clans,

In conclusion, the moral of the story for me and other parents is to pay attention. Make sure you know what the liabilities are about your kids’ iPhone/iPod/iPad usage and educate yourself about how to set up the necessary precautions, such as enabling restrictions (see links below) that cannot be changed by the user without an additional password.

You should certainly read these articles:

In our case, our son is temporarily blocked from buying anything on iTunes until we have set him up with his own Apple ID that can only be topped up by iTunes gift cards that he will have to save up and buy himself or receives as birthday/Christmas presents. Oh, and just to be on the safe side, I’ve changed our family iTunes password.

The in-app purchase issue obviously applies to the many other devices on the market. Mashable.com has an article that explains how to enable parental controls on Kindles, Windows 8, and Google devices.

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