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How In-App Purchases are Victimizing Consumers

Consumer Alert
Stop surprise in-app charges from draining your wallet

If your child is racking up charges from in-app purchases, you’re not alone. Here’s how “bait apps” prey on kids — and the steps parents can take to stop unauthorized spending.

1 How “Bait Apps” Target Kids

If your child is racking up charges from in-app purchases online, you’re not alone. They are likely victims of “bait apps” that prey on children who either don’t realize that they are making purchases or don’t understand the full financial consequences of their actions. Giant tech companies are not motivated to create safeguards because these purchases generate significant revenue. In fact, some companies actually create an environment where this type of fraud is encouraged. Five years ago, the Federal Trade Commission required Apple and Google to refund parents millions of dollars for in-app purchases made by their children. Two years ago, Amazon followed suit. In addition to refunds, Apple and Google promised to change their billing practices after the FTC discovered that, despite the class action suits, unauthorized purchases continued at the companies.

2 Facebook’s “Friendly Fraud”

A recent report by the Center for Investigative Reporting revealed information even more shocking: Facebook knowingly and deliberately “orchestrated a multiyear effort that duped children and their parents out of money, in some cases hundreds or even thousands of dollars and then refused to give the money back.”

A class action suit filed against Facebook claims that it targeted children in an effort to expand revenue for online games like Angry Birds, PetVille and Ninja Saga. According to documents in the suit, “Facebook encouraged some developers to let children spend money without their parents’ permission.”

One document called Facebook’s efforts to maximize profit at consumers’ expense “friendly fraud.” Facebook’s tactics to generate revenue were so successful, one teenager even racked up an outrageous $6,500 in charges over a two week period. Although this was an extreme example, it illustrates the tremendous financial risks parents face. Despite knowing that children typically generated these charges unknowingly, they denied a refund. In fact, Facebook called these users “whales,” a label used in casinos to describe big spenders.

3 How Parents Can Protect Themselves

So what can parents do to protect themselves? According to the New York Times, here are a few steps you can take to prevent, or at least minimize, unauthorized purchases online:

Apple:
Set up a family sharing account. Turn on the “Ask to Buy” feature in the child’s account in the family sharing settings. Parents will receive an alert any time their child wants to make a purchase.

Facebook:
Because there are so many ways to make purchases on Facebook, an efficient way to protect yourself is to remove payment from Facebook altogether.

Amazon:
Amazon’s parental controls feature allows users to add security for in-app purchases.

Google:
Google Family Link promises to create healthy digital habits. But parents beware: children can opt to leave Family Link once they turn 13.

4 Talk to Your Kids About the Risks

Despite some of the safeguards available to parents, the most important thing to do is talk to your children about the risks of playing games online.

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Frequently Asked Questions

What are “bait apps” and how do they victimize consumers?

Bait apps prey on children who either don’t realize they are making in-app purchases or don’t understand the full financial consequences. Giant tech companies are not motivated to create safeguards because these purchases generate significant revenue, and some companies actually create an environment where this type of fraud is encouraged.

Did Apple, Google and Amazon have to refund parents for in-app purchases?

Yes. Five years ago the Federal Trade Commission required Apple and Google to refund parents millions of dollars for in-app purchases made by their children, and two years ago Amazon followed suit. Apple and Google also promised to change their billing practices after the FTC found unauthorized purchases continued despite the class action suits.

What is Facebook’s “friendly fraud”?

According to documents in a class action suit, one internal document called Facebook’s efforts to maximize profit at consumers’ expense “friendly fraud.” Facebook allegedly encouraged some developers to let children spend money without their parents’ permission, and even labeled big-spending users “whales,” a casino term for big spenders.

How can parents prevent unauthorized in-app purchases?

On Apple, set up a family sharing account and turn on the “Ask to Buy” feature. On Facebook, remove your payment method altogether. On Amazon, use the parental controls feature to add security for in-app purchases. On Google, use Google Family Link, though children can opt to leave it once they turn 13.

Besides app settings, what is the most important step parents can take?

Despite the safeguards available, the most important thing parents can do is talk to their children about the risks of playing games online. App controls help, but an honest conversation about how in-app purchases work is the strongest protection against surprise charges.

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Learn how in-app purchases victimize consumers, why kids rack up surprise charges, and the Apple, Google, Amazon and Facebook steps parents can take today.

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If your child is racking up charges from in-app purchases, you’re not alone.

If your child is racking up charges from in-app purchases online, you’re not alone.

A recent report by the Center for Investigative Reporting revealed information even more shocking.

A class action suit filed against Facebook claims that it targeted children in an effort to expand revenue for online games like Angry Birds, PetVille and Ninja Saga.

One document called Facebook’s efforts to maximize profit at consumers’ expense “friendly fraud.”.

So what can parents do to protect themselves?.

Apple: Set up a family sharing account.

Facebook: Because there are so many ways to make purchases on Facebook, an efficient way to protect yourself is to remove payment from Facebook altogether.

Amazon: Amazon’s parental controls feature allows users to add security for in-app purchases.

Google: Google Family Link promises to create healthy digital habits.

Despite some of the safeguards available to parents, the most important thing to do is talk to your children about the risks of playing games online.

Billshark fights unfair billing practices in many other industries.

Bait apps prey on children who either don’t realize they are making in-app purchases or don’t understand the full financial consequences.

Yes.

According to documents in a class action suit, one internal document called Facebook’s efforts to maximize profit at consumers’ expense “friendly fraud.”.

On Apple, set up a family sharing account and turn on the “Ask to Buy” feature.

Despite the safeguards available, the most important thing parents can do is talk to their children about the risks of playing games online.

Billshark negotiates your bills for you — no savings, no fee.

Billshark helps lower internet, wireless, cable, satellite radio, and other monthly bills.

Our experts handle providers for customers and share updates throughout the process.

Customers pay only when Billshark finds savings on eligible bills.

1 How “Bait Apps” Target Kids.

2 Facebook’s “Friendly Fraud”.

3 How Parents Can Protect Themselves.

4 Talk to Your Kids About the Risks.

Frequently Asked Questions.

What are “bait apps” and how do they victimize consumers?.

Did Apple, Google and Amazon have to refund parents for in-app purchases?.

What is Facebook’s “friendly fraud”?.

How can parents prevent unauthorized in-app purchases?.

Besides app settings, what is the most important step parents can take?.

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