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The Trouble with In-App Purchases

written by: George Garza•edited by: Simon Hill•updated: 5/19/2011

Buying apps online for mobile devices has been a profitable enterprise for Apple, Google and developers. Apple keeps 30% of the sale amount and the rest goes to the developer. In-app purchases are another way to increase sales but this has caused problems for parents whose children do the buying.

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    The Applications Purchase Operation

    It used to be simple, you buy and download an app for a one-off fee. But now you can upgrade the app with additional content from extra levels to new avatars. This allows customers to get new content, or add features directly into the app without having to go back to the App Store. Now, once that upgrade happens, customers are billed directly.

    This comes from Apple's current approach to in-app purchases. With iOS 3.0 or later, customers can purchase subscriptions and extra content from within an application using their iPhone, iPad, or iPod Touch.

    Some examples of these purchases are bonus game levels or maps, additional experience points, subscriptions, and recurring services. You will be required to enter your password in order to purchase these kinds of application upgrades.

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    The Smurfberry Suit

    Smurfberry  Here is the problem, children were ordering extra content from within the app without their parent's consent. One child even ran up a $1,400.00 bill on their parent's credit card. This happened because when they made an in-app purchase, they used the iTunes password, which they got from their parents, and nothing more. This is because many believe that you have to have a credit card to use iTunes purchases, but that is not true or necessary.

    The setting starts with parents typing in their password to download a game or other app for their child, and they are not aware that there is a 15-minute window in which Apple allows additional purchases. So if the parent steps away, and the child sees another app, they could download that too.

    One element of the Apple process is that iPhones tend to be used by only one individual, whereas iPads and iPod Touch devices are often shared among family members. This can create an environment where multiple users, including children, have access to the App Store and can make purchases.

    So where is the blame for this problem? Is it Apple because they had the 15 minute window, and require a second password to be used for the in-app purchase? Was it the parent, for not watching more carefully what their children were doing on the Internet? Was it the developers who were interested in maximizing their apps market by making it easy to buy their product? It does look like all three share some of the blame for this problem, not just one party.

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    Google Android and the In-App Operation

    Google's in-app purchasing works differently than Apple's because Apple's is connected to the iTunes account. That means that they already have your credit card information in their system. Not so with Google, when a customer wants to make an in-app purchase, the user must pull out their credit card there and then. This slows the purchasing problem down, but makes it less conducive to purchasing problems like Apple's.

    But last April, a user found that her daughter had purchased $149.00 worth of "gems" for a restaurant building app that the little girl was playing. Unbeknownst to the mother, no passwords were asked for by the app maker or Google in order to complete the purchase. So while purchasing via credit card can be more complicated using Android, the lack of passwords creates the same type of problem that Apple had.

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    Other similar problems

    Many websites offer entertainment to customers. Some are gaming websites while others show videos or play music, and some are gambling. The latter sometimes attracts children with enticements to win money without knowing that gambling sites are profit making entities, and frequently earn more than they pay out.

    It is easy to let young people enter and place bets on a gambling site. Indeed, about a third of gambling websites allow youth's under-18 to bet, with online casinos and bookmakers having online identity 'deficiencies' that enable youngsters to gamble on the Internet.

    Online gambling for the under 18 not only can lead to debt, it can also lead to a gambling addiction, such as the story of a 15 year old boy who began to gamble online then took his mother's savings and finally built up a huge gambling debt because his bets were losses.

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    Summary

    So by making it easy to upgrade your apps, customers find that their credit card accounts may have many new charges that they were not expecting; not because Apple or Google were fraudulently exploiting their credit card, but because family members, especially children (under 18) were working the account and purchasing the apps without their parent's knowledge or permission.

    Parents have to be the first line of prevention, telling their children that they cannot purchase any items online without first talking about it to their parents. But, having said that, Google, Apple, and any other online companies must be more security conscious; having passwords on in-app purchases is a start, but also a built in time limit on credit card transactions should be in place. That is a requirement that periodically, the credit card information must be entered in again if they want it stored online, like every 30 days. Users should also be aware of how to keep their credit cards safe online.

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    References

    The Smurfberry Suit

    • http://support.apple.com/kb/ht4009
    • Image: http://gigaom.com/apple/in-app-purchases-and-the-smurfberry-affair/

    Google Android and the In App Operation

    • http://thenextweb.com/google/2011/04/20/six-year-old-spends-149-99-on-android-in-app-purchase/

    Other Similar Problems

    • http://www.infobarrel.com/Underage_Teens_and_Online_Gambling%3A_The_New_Generation_of_Addiction