In-app purchases and kids don't mix, but who do we blame?

We often hear tales of children overspending on apps, and we may wince at the end of the month when we see our bill -- whether it is due to sons and daughters or ourselves. But is there truly a reason to hold tech firms accountable for our childs' in-app purchases?

Children in the West are often prolific users of technology, but don't always understand the value of money when we hand over our smartphone or tablet. We heard how an 8-year-old girl spent £4000 ($6900) of her father's stash on virtual saddles in a horse riding game, how Zombies Vs Ninjas cost a family $2600 in virtual weaponry courtesy of their five-year-old son, and who can forget the case of one child spending £980 ($1700) on virtual donuts in a Simpsons game?

The consequences of easy payment systems in conjunction with a lack of parental awareness can lead to "bill shock," but perhaps we are too quick to assign blame elsewhere.

To try and combat the problem of unauthorized child in-app purchases, the US Federal Trade Commission (FTC) settled with Apple for approximately $32.5 million, released as customer refunds for those who complained about in-app purchases. The iPad and iPhone maker was also ordered to change billing practices to ensure "express, informed consent" is received before a purchase is made. Amazon, however, is resisting similar orders issued by the FTC to change its policy to cover unauthorized in-app purchases by children.

Despite the FTC's investigation into in-app revenue streams and the purchase processes that users are offered, is it really down to app providers to prevent unauthorized buys?

Mobile payment provider Bango has revealed just how frequently we spend our hard-won cash on digital content, and how small changes in payment methods -- including one-click buys -- have transformed our spending habits, for good or ill.

Bango's technology is used to charge the cost of digital purchases from our smartphones. Amazon, BlackBerry World, Facebook, Firefox Marketplace, Google Play and the Windows Phone Store are clients of Bango, and the firm's data has revealed that hardly anyone wants to claim a refund on digital content -- and of those that do, only a small amount are child-related.

Bango says that smartphone users are often comfortable spending vast amounts of money on digital goods, and the availability of operator billing ensures users are comfortable with regular and increasing levels of digital purchases -- either that, or perhaps the quick and easy purchase channel, just "one click," ensures users aren't fussed about buying the odd in-app purchase here and there -- even if the total bill at the end of the month makes us sweat.

In the first four months of 2014, Bango collated data from one unnamed app store which is a dominant operator in the West. The data collected from the provider includes the full range of digital content -- such as apps, in-app purchases, games, music and subscriptions. From January to April, there was a steady increase in user spend across hundreds of thousands of purchases, and only a small percentage of purchases were queried or refunded.

Across the time period, 0.0255 percent of completed purchases were queried, and of these, 24 percent were reported as unauthorized child purchases, which the firm says is approximately one in 16,000. According to Bango's data, the average value of an unauthorized child purchases stands at $132, although there is variation -- with claims starting at $33.30 and reaching $464.77.

While children sometimes do rack up huge bills, these incidents tend to be isolated and "extremely rare," and Bango says that these particular examples "obscure the bigger picture."

It is also not only children that can be at fault for prompting bill shock. In what Bango terms "digital gluttony," our own desire for digital content can sometimes obscure our rationality -- or simply, we're happy to pay for it.

The biggest buyers of digital content across a range of app stores partnered with the company, 1.6 percent of all app users, make up to 25 purchases a month. In total, 6.7 percent of app users made 10 or more purchases a month, and 15.6 percent of users spent over $10 in a four-week period. This equates to approximately one person in six who are happy to spend over $10 a month on digital content.

An interesting statistic also compiled by the payment provider is that one person in 200 is known to spend over $100 a month.

One-click billing has made the purchase process easier. There is a transformative effect on sales due to streamlining, which means users do not have to go through layers of verification and typing in credit card numbers to buy content. 

This process is at the heart of complaints levied against app providers. Streamlined billing, without notifications, give children the opportunity to make purchases without understanding the consequences. However, it is parents that are left to front the bill -- and a moment's distraction is all it takes.

Richard Leyland, Vice President of Marketing Communications at Bango commented:

"There’s a natural tension between providing a frictionless payment experience and building in security measures, such as passwords, warning notices and email confirmations.

Bango’s approach is to remove all unnecessary payment friction, leaving only well engineered security measures in place. Our own analysis reveals that unauthorized child spending is a small but nonetheless real problem. App stores and payment providers must work to protect consumers, but we shouldn’t lose sight of the bigger picture which is rapid growth in the number of purchasing customers, growth in the average spend per customer, and extremely low refund rates.”

There is another element to consider -- our own self control. Longer purchase processes give us time to consider whether we truly need to spend money to access extra lives or reach the next level, whereas one-click app buys often provide us with the ultimate outlet for spontaneous purchases. For some, these one-click buys can be addictive. 

As a personal example, a friend of mine who has a condition that leaves her in constant pain began playing a popular gaming app to keep her mind occupied at home. Before she knew it, she had spent several hundred pounds over a period of four months. The easy of spending and spread of the cost made it easy "not to think about it," she says, and the app provided "escapism" which filled a need for entertainment and challenge while she is ill. It was only when she sat down and reviewed the overall costs of in-app purchasing that she disabled and removed the game. 

Perhaps rather than blaming tech firms for the problem we should review our own self-control and practices when it comes to children, as well as our own app-related buys. Just as we are responsible for using one-click systems to buy virtual items for ourselves, if a parent doesn't review an app before handing it over to a child to play to keep them distracted for five minutes, the responsibility of purchases should ultimately lie with them -- as long as apps are properly labeled with warnings alerting parents of in-app content available to buy.

The phrase "Free to play" is the sticking point -- often, parents assume that no money can be transferred, billed or made through the application. 

Frictionless billing systems, despite the level of convenience, can be a problem if there are users who are minors. Perhaps an additional, opt-in step is needed within the buying system -- such as inputting a password -- before in-app buys can be made, which would stop this impacting on adult users who enjoy the streamlined process, but give parents more control over their devices if children have access to them. What tech companies can also do is promote monitoring systems such as Kid's Corner which allow parents to retain control without continually supervising over the shoulder. 

If anything can be laid at the feet of tech giants, it is a lack of warning about in-app purchases made in digital stores. However, we ourselves want streamlined payment systems, and crave digital content. It is moreover up to parents not to assume apps are completely free -- and rather, set up their devices to protect their children as well as their bank balances.