» Apple Sued Over "micro"-transactions

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Parents sue Apple over in-app game charges Apple is being sued by parents who claim the iPhone-maker is unfairly profiting from in-app payments in games aimed at children. Many games on the iOS platform are free to download but offer game add-ons, some of which cost nearly £70. The group said it was too easy for children to run up big bills without "authorisation of their parents". Apple had called for the case to be dismissed, pointing out that in-app purchasing can now be disabled. However, US District Judge Edward Davila said the hearing could now go ahead. Apple's purchasing system allows users to enter their credit-card details once and then authorise future payments for apps and other items with just a password. In a recent update to its iOS software, Apple added extra steps in the in-app purchasing process, including the requirement to enter an additional password to buy items within apps. It is now also possible to turn the feature off entirely. However, the group of parents, led by attorney Garen Meguerian, said children were still encouraged to buy items by the games' addictive nature, and parents might not be fully aware of the financial implications. Apple has not yet responded to requests for comment on the case. Other mobile platforms, such as Google's Android, also offer in-app purchasing functions. Smurfberry Shop In a court filing first made in 2011, Mr Meguerian highlighted several titles which he believed were developed "strategically to induce purchases of Game Currency". Among them was Smurfs' Village, developed by Capcom. While the game itself is free, in-app purchases available in the "Smurfberry Shop" range from £2.99 to £69.99. A warning message in the game's description states that Smurfs' Village "charges real money for additional in-app content". It is possible to play the game without spending money. However, progress is typically far slower for the player. One review of the game states: "You really wont get anywhere with just the free stuff." In-app payments have been the subject of scrutiny in the US. Last year, the practice was investigated by the US Federal Trade Commission which ruled developers must do more to warn parents about the content of their games. 'Difficult steps' In the UK, Niamh Bolton told the BBC she felt "physically sick" after learning her 10-year-old daughter had totted up a bill of more than £1,500 while playing Tap Pet Hotel. The game, developed by San Francisco-based Pocket Gems, is part of a wider "Tap" series which was also referred to in Mr Meguerian's court filing. Ms Bolton said the purchases, which were made before Apple added the in-app disabling feature, were made within two hours. "It was more than our monthly mortgage repayment," she told the BBC. "We didn't have that sort of spare cash in the bank account." She was able to get the money refunded after contacting Apple customer services. "The difficulty we had was contacting iTunes," she said. "I had to go through a series of very difficult steps to send an email to them."

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Which stems from this earlier issue:

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In-app purchases in iPad, iPhone, iPod kids' games touch off parental firestorm By Cecilia Kang Washington Post Staff Writer Tuesday, February 8, 2011; 12:34 AM Over the winter break from school, 8-year-old Madison worked to dress up her simple mushroom home on the iPhone game Smurfs' Village. In doing so, she also amassed a $1,400 bill from Apple. The Rockville second-grader didn't realize the Smurfberries she was buying on the popular game by Capcom Interactive were real purchases, much like buying a pair of shoes from Zappos or movie tickets from Fandango. After all, lots of children's games require virtual payments of pretend coins, treasure chests and gold to advance to levels. But like a growing number of parents, Madison's mom, Stephanie Kay, was shocked to find very real charges from iTunes show up in her e-mail box days later. "I thought the app preyed on children," she said. "Note that the Smurf app states it is for ages 4-plus." The games are part of a category of applications on Apple's iTunes store that are free to download but let companies charge users for products and services when the application is launched. Following Apple, Google this week introduced these so-called "in-app purchases" for Android mobile phones and tablets, which experts say could create a new economy for newspapers, record labels and movie studios that have been struggling with ways to thrive online. The in-app purchases have also catapulted children's games such as Smurfs' Village and Tap Zoo, by San Francisco-based Pocket Gems, into the ranks of the highest-grossing apps on iPods, iPhones and iPads. But the practice is troubling parents and public interest groups, who say $99 for a wagon of Smurfberries or $19 for a bucket of snowflakes doesn't have any business in a children's game. Though a password is needed to make a purchase, critics say that the safeguards aren't strong enough and that there are loopholes. "Parents need to know that the promotion of games and the delivery mechanism for them are deceptively cheap," said Jim Styer, president of Common Sense Media, a public advocacy group for online content for children. "But basically people are trying to make money off these apps, which is a huge problem, and only going to get bigger because mobile apps are the new platform for kids." Apple said it tries to prevent episodes like Madison's by requesting a password when making in-app purchases. And parents can change settings on Apple's gadgets to restrict downloading and transactions, Apple spokeswoman Trudy Muller said. But parents say changing those settings isn't easy or obvious. Madison's mother let her download Smurfberries with the help of her older sister, who knew the family's iTunes password. From there, Madison went on a Smurfberry binge on the family iPad. Arlington second-grader Leyla Ulku figured out her parents' password and recently racked up a $150 charge from buying buckets of stars and snowflakes to build a safari out of sea turtles and giraffes on Tap Zoo. Both sets of parents disciplined their children and have since changed their passwords. And both families disputed the charges with Apple and received one-time reimbursements, they said. And even though the episodes served as lessons about supervision on the gadgets, other parents point to loopholes. After a password is inserted, Apple allows a 15-minute window for purchases and downloads without having to reenter the password. Brent Goldberg, a software engineer in Riverside, Calif., thought he took all the right precautions. He looked through the Dolphin Play game his two elementary-school-age sons asked to download and read through the description. It looked appropriate for his children and he knew they would be protected from doing much else on the game without a password. He downloaded the game without knowing about the 15-minute password window. In that time, his two boys spent $52 buying coins to play with dolphins on the game. The sons said they knew they were making purchases but they thought it was "computer money," Goldberg said. "The problem is just how easy this can happen," he said, adding that Apple could make parental controls the default setting when downloading an app. One parent in Denmark began a Facebook page called "Ban Credit Card Bait Apps on Apple Appstore" earlier this week. It has about four dozen members. Recently, Smurfs' Village and Tap Zoo included disclaimers on the iTunes store saying that the games are free but that items purchased within the games cost real money. Pocket Gems and Capcom Interactive said they don't want users to accidentally rack up charges. Capcom recently included a pop-up warning at the start of the game to remind users of the real cost of some features. "We find consumer complaints of children inadvertently purchasing in-app content lamentable," Capcom Interactive said in a statement. It said it does not try to take advantage of children, having been in the comics and gaming business for 25 years. But the iTunes practice of remembering passwords has created problems for Capcom game users, it said. Of the more than 37,000 comments on both the Smurfs' Village sites, many parents warned users of high charges. Still, the games have become hits on Apple's gadgets, and investors see in-app purchases as a lucrative business model for start-ups. Pocket Gems said earlier this month that it received $5 million in financing from Sequoia Capital and had its first month of "multimillion-dollar" sales. It has had 18 million downloads of its applications, including Tap Farm and Tap Jungle, the firm said. Applications analytics firm Distino said in January that revenues from in-app purchases for popular iPad and iPhone applications doubled in the second half of 2010. Apple takes a 30 percent cut of in-app sales.

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So then, do you think it right that apple be sued and thusly forced to change up their management of micro-transactions? Or should parents step up and learn to use the systems? Or should both be held accountable? (Parents for letting kids rack up costs by not paying attention/knowing how the game/app works in terms of costs and the company for encouraging it?)

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In-app purchases in iPad, iPhone, iPod kids' games touch off parental firestorm By Cecilia Kang Washington Post Staff Writer Tuesday, February 8, 2011; 12:34 AM Over the winter break from school, 8-year-old Madison worked to dress up her simple mushroom home on the iPhone game Smurfs' Village. In doing so, she also amassed a $1,400 bill from Apple. The Rockville second-grader didn't realize the Smurfberries she was buying on the popular game by Capcom Interactive were real purchases, much like buying a pair of shoes from Zappos or movie tickets from Fandango. After all, lots of children's games require virtual payments of pretend coins, treasure chests and gold to advance to levels. But like a growing number of parents, Madison's mom, Stephanie Kay, was shocked to find very real charges from iTunes show up in her e-mail box days later. "I thought the app preyed on children," she said. "Note that the Smurf app states it is for ages 4-plus." The games are part of a category of applications on Apple's iTunes store that are free to download but let companies charge users for products and services when the application is launched. Following Apple, Google this week introduced these so-called "in-app purchases" for Android mobile phones and tablets, which experts say could create a new economy for newspapers, record labels and movie studios that have been struggling with ways to thrive online. The in-app purchases have also catapulted children's games such as Smurfs' Village and Tap Zoo, by San Francisco-based Pocket Gems, into the ranks of the highest-grossing apps on iPods, iPhones and iPads. But the practice is troubling parents and public interest groups, who say $99 for a wagon of Smurfberries or $19 for a bucket of snowflakes doesn't have any business in a children's game. Though a password is needed to make a purchase, critics say that the safeguards aren't strong enough and that there are loopholes. "Parents need to know that the promotion of games and the delivery mechanism for them are deceptively cheap," said Jim Styer, president of Common Sense Media, a public advocacy group for online content for children. "But basically people are trying to make money off these apps, which is a huge problem, and only going to get bigger because mobile apps are the new platform for kids." Apple said it tries to prevent episodes like Madison's by requesting a password when making in-app purchases. And parents can change settings on Apple's gadgets to restrict downloading and transactions, Apple spokeswoman Trudy Muller said. But parents say changing those settings isn't easy or obvious. Madison's mother let her download Smurfberries with the help of her older sister, who knew the family's iTunes password. From there, Madison went on a Smurfberry binge on the family iPad. Arlington second-grader Leyla Ulku figured out her parents' password and recently racked up a $150 charge from buying buckets of stars and snowflakes to build a safari out of sea turtles and giraffes on Tap Zoo. Both sets of parents disciplined their children and have since changed their passwords. And both families disputed the charges with Apple and received one-time reimbursements, they said. And even though the episodes served as lessons about supervision on the gadgets, other parents point to loopholes. After a password is inserted, Apple allows a 15-minute window for purchases and downloads without having to reenter the password. Brent Goldberg, a software engineer in Riverside, Calif., thought he took all the right precautions. He looked through the Dolphin Play game his two elementary-school-age sons asked to download and read through the description. It looked appropriate for his children and he knew they would be protected from doing much else on the game without a password. He downloaded the game without knowing about the 15-minute password window. In that time, his two boys spent $52 buying coins to play with dolphins on the game. The sons said they knew they were making purchases but they thought it was "computer money," Goldberg said. "The problem is just how easy this can happen," he said, adding that Apple could make parental controls the default setting when downloading an app. One parent in Denmark began a Facebook page called "Ban Credit Card Bait Apps on Apple Appstore" earlier this week. It has about four dozen members. Recently, Smurfs' Village and Tap Zoo included disclaimers on the iTunes store saying that the games are free but that items purchased within the games cost real money. Pocket Gems and Capcom Interactive said they don't want users to accidentally rack up charges. Capcom recently included a pop-up warning at the start of the game to remind users of the real cost of some features. "We find consumer complaints of children inadvertently purchasing in-app content lamentable," Capcom Interactive said in a statement. It said it does not try to take advantage of children, having been in the comics and gaming business for 25 years. But the iTunes practice of remembering passwords has created problems for Capcom game users, it said. Of the more than 37,000 comments on both the Smurfs' Village sites, many parents warned users of high charges. Still, the games have become hits on Apple's gadgets, and investors see in-app purchases as a lucrative business model for start-ups. Pocket Gems said earlier this month that it received $5 million in financing from Sequoia Capital and had its first month of "multimillion-dollar" sales. It has had 18 million downloads of its applications, including Tap Farm and Tap Jungle, the firm said. Applications analytics firm Distino said in January that revenues from in-app purchases for popular iPad and iPhone applications doubled in the second half of 2010. Apple takes a 30 percent cut of in-app sales.

Source

step up and learn the system like we gamers have to with all this DLC crap going on.

This just one of those odd moments for APPS?

In one regard, it is the parent's responsibility to monitor the child and make sure things like this don't happen. I mean really, how many kids know what a dollar means? They don't consider cost at all. Money doesn't mean anything to them. So if it says <item> at <cost>, they don't care about the cost they just want the item. So it's how they end up with huge debt since they can mass-buy items and spend a lot of real money, really quick. So it is partly the parent's job to ensure this doesn't happen... They need to know the system, know how the game/application handles transactions and if they can disable or limit them. It is their responsibility to monitor their credit cards for unusual purchases and find out what is going on.

Sad part is that most parents don't know how to use the games/applications nor do they care. They just want a scapegoat after something goes wrong rather than try to learn from the mistake and not repeat it. Much like the situation with videogame ratings/the ESRB. How many parents have openly admitted they don't know anything about it and just buy their kids whatever instead of taking the time to investigate and learn?


Though the companies are not off the hook entirely either. They engineer these games so that players will want/need to spend money. And games made for kids really should not have these in-app micro transactions using real money. (I find the whole practice disgusting. Since the shameless marketing towards kids pretty much makes it probable that situations like this will occur fairly frequently. And many of the parents simply aren't equipped to deal with it. A fact which I feel companies will rather shamelessly exploit so they can milk more dollars out of people. Even though they'd never openly admit they use tactics like that...
But it doesn't help when the system makes it very easy to quickly spend money by offering to remember passwords, saving visa/payment details, etc...)

Bothers me that even simple app games even have a transactions to them. They way I look at it is yes its partly the parents and yes its also the buisnesses that are responsible for these kinds of shinanigans. This generation of games so far just feels like a slave pit. Then again going with the times its because of this gloriously pathetic economy. Well even if there wasn't that problem buisnesses will still try to earn more money out of something as simple as buying smurfberries...? I suspect the next thing people will report about is how much it takes to walk your smurf across the map in the app. Hey thats $10.00 ducketts ,but don't worry it on your credit card so its covered.

In reality why would you let your little kiddlen play with your phone with apps? If you really wanna distract them get them a DS or something to occupy them. Even better pay attention to your credit card and be more intentive to your kid unless your at work or something a piece of electronic hardware doesn't excuse you from parenting.

In another reality why would you put transactions to an app game? I see no place for it and obviously its another scham to get more money and with a kid who doesn't know the meaning of monies yet. make a kid version of said app game? I don't understand why we are getting dumber on parenting ,but buisnesses need to be wary because that kind of crap obviously isn't gonna stand well for much longer. Sorry it took me longer to understand the article because of like what? With my first post.