In-app purchases and the App Store: What every parent needs to know

July 21, 2014

In-app purchases (IAP) can seem like complicated, confusing things, especially if you're a parent new to the iPhone, iPod touch, iPad, and App Store, and trying to figure it all out for yourself and your kids. If you're already concerned about spending, if you're already stressed by technology, if you're already juggling as much as you can, then in-app purchases gone wild can sound downright scary. Sadly, that's largely because of stories, needlessly sensationalistic stories, portraying IAP as scary. Stories that, instead of empowering parents to take control, paint them as hapless victims whose families are completely beyond control. Luckily, Apple provides tools for any parent to effectively manage their children's App Store activities, including in-app purchases, and there are even more on the way soon.

So what's an in-app purchase? Just that — a purchase you make inside an app or game after you've already downloaded it from the App Store. An IAP can be consumable, like game coins. You buy them, use them, and then they're gone and you have to buy more if you want to use more. They can also be non-consumable, like extra levels. You buy them and keep them effectively forever. They can even be renewable, like monthly subscriptions that repeat until you cancel them.

There's a lot of jargon thrown around. An app or game that is free to download but charges for in-game content is called "free to play" or "freemium" (a portmanteau of free and premium). A game that costs money to download and also charges for in-game content is called "paymium".

Some developers do it right, providing a great experience whether or not you opt for in-app purchases, and simply make it even better if you do. Others do it wrong, frustrating and manipulating you into handing over as much money as possible. (Think casino in app form.)

So, what can you do to make sure you're both informed and empowered when it comes to your kids and in-app purchases?

In-app purchase options

Apple provides for a variety of hardware, software, services, and resources to help parents learn more about and better manage in-app purchases.

On the App Store home page, at the bottom, are prominent links to:

The first explains what IAP are, the different kinds, and what parental controls are available. The second also explains IAP, but also passwords and Touch ID, allowances and gift cards, parental controls, age ratings, and passcodes. There's also "About Kids Apps and Games" which explains the content and categories.

On the App Store:

In Top Charts right beneath the price badge, Apple puts an "In-App Purchase" label below any app or game that contains IAP.
On an app or game's description page, Apple has an "In-App Purchases" tab that lists all the IAP inside and what they cost.

This way you can know what you're getting before you download or buy. There's a special Kids section that's even more stringently regulated than the general App Store, so you can be confident only appropriate material, sorted by age, can be found there.

In Settings there are:

Restrictions where you can completely turn off Installing Apps and making In-App purchases.
Parental controls to make sure your iTunes password is required, immediately, for every purchase.
Options you can choose which range from Don't Allow Apps, or only allow age levels from 4+, 9+, 12+, or 17+.

For purchases:

In apps, Apple informs you of what in-app purchase you're making and how much it will cost before it asks you to confirm your purchase. (Some developers also inform you about in-app purchases when you first launch the app.)
With Touch ID, Apple lets you turn off iTunes account purchases, so even if your child's fingerprints are registered to unlock your phone, it can't be used to buy things.

In iTunes:

Apple allows you to load gift cards and even set a recurring allowance from your own iTunes account into your child's iTunes account so there's an absolute limit on what they can spend at any one time.
Apple allows you to request a refund for any unauthorized purchases your child may have made. (Though given all the above, that should be nigh-impossible.)

Taking control of in-app purchase on the iPhone, iPod touch, and iPad

Given the above, there are several ways to make sure you never, not ever have unwanted in-app purchases of any kind on your account.

Put your child on your iTunes account, don't give them your password

Whether your child is using your iPhone, iPod touch, or iPad, the easiest way to keep them from making unauthorized or unintentional in-app purchases is to simply not give them your iTunes password. That way your child has no way to buy anything without your express consent (you entering the password). There is one additional step to perform, however, to make sure they can't quickly buy anything else once you have entered your password.

Launch Settings from your Home screen
Tap on General
Tap on Restrictions
Tap on Enable Restrictions
Enter a 4-digit Passcode
Confirm the Passcode
Scroll down to Allowed Content
Tap on Require Password
Tap on Immediately

Now a password will be required, immediately, for any iTunes purchase, and you'll never have an unwanted charge again. (If you have any App Store restrictions in place, including age restrictions, the password will automatically be set to immediate.)

Note: Your iTunes password is different from your device passcode, password, or Touch ID. You can give your child the passcode to your device if you really want to, and can even register their fingerprint for Touch ID (and turn it off for App Store purchases), and still not give them your iTunes password.

How to disable Touch ID for iTunes and App Store purchases

Give your child their own iTunes account, teach them how to manage money

If your child has their own iPhone, iPod touch, or iPad, you can choose to give them their own iTunes account as well. When you set up their iTunes account, don't attach a credit card to it. Buy an iTunes Gift Card instead and use that to create the account. That way there's a hard limit on how much money your child can spend. When the gift card runs out, no more purchases, in-app or otherwise.

You can then choose to give them additional iTunes Gift Cards or you can set them up with an iTunes allowance so a set amount of money is delivered from your account to their regularly (if you choose an allowance you can even create an iTunes account for your child as part of the setup process.) Again, when that runs out, that's it until the next time.

That not only prevents accident or abuse, it teaches a valuable life lesson.

How to set up an iTunes allowance

In-app purchases past, present, and future

When Apple originally introduced in-app purchases they had a rule that "free apps have to stay free". In other words, you couldn't have a free app and then make money off in-app purchases. You had to make a paid app. No "freemium" only "paymium".

It was a new system, however, and Apple, developers, and customers were all learning and trying to figure it out. For example, "free apps have to stay free" didn't allow developers to make, and customers to benefit from, free apps as demos or trials. Even though $0.99 doesn't sound like much, it all adds up, and many people just wouldn't or couldn't pay it over and over again, sight unseen. So, Apple dropped the "free apps have to stay free" and developers who chose to could make games that cost nothing up front but offered compelling in-app purchases in an attempt to get customers to upgrade.

Unfortunately, every system is subject to abuse. Some developers decided to make the "free" part so utterly frustrating and the in-app purchases so enticing that many people would pay them just to get their car back on the track faster or have a higher crushing score than their friends. Likewise, some customers were content to download a free game and even if they loved it, never make any in-app purchase at all, which made it hard for developers to stay in business.

Inevitably, before anyone knew any better, some kids racked up huge bills for in-app purchases, most famously "Smurfberries". Apple refunded a lot of money, the U.S. Federal Trade Commission got involved, and the European Union is still getting involved. They'd like Apple — and Google, and Amazon, and every company with an app store — to make in-app purchases and their costs even more clear.

Not surprisingly, the EU is singling out Apple — nothing gets bigger headlines that Apple — despite Apple changing and improving the in-app purchase system on the App Store over and over again, and on a global basis. (The EU obviously cares only for the EU, just like the FTC cares only for the U.S., but parents have children all around the world.) What the EU wants also seems, at least based on the coverage, to be ill-defined.

For example, the EU wants free-with-IAP apps to be labeled as something other than "free". What would you label them as? "FwIAP"? Would that be less or more confusing? How would you differentiate between apps that are delightful for free but have a few optional IAP (like different colored costumes) from a game that's all but unplayable for "free"?

The EU doesn't want apps or games that strongly urge kids to buy them or persuade adults to buy them for them. Again, kids without passwords can't buy anything, and kids with limited funds in their own accounts can't by much of anything. Apple could police the general App Store even more strongly than they already do — and like they already do in the Kids section which exists for just exactly this reason. Developers who act poorly could also be targeted directly.

The EU wants consumers informed about IAP, and for the "Require password immediately" setting to be default. The first is, as far as I can tell, long since done. The second is tougher. Apple used to require passwords immediately with no other options and people complained about it in such numbers and with such frequency that it was changed. Apple could launch yet another pop up the first time an App Store purchase is made and ask if it should make itself child-safe.

And the EU wants email address provided for vendors so they can be contacted directly with concerns. Apple already provides a "support" link on every App Store page to enable just such requests. Is email the best form of communication for the most people? Would a form be better? Again, some consideration would seem appropriate here before publication.

What's more, there's a chilling lack of respect for personal and parental responsibility in the language being used. Trying to protect children by infantilizing parents is not an effective solution. Instead, informing and empowering parents allows them to not only protect but also inform and empower their children as well. That's what gets results now and into the future.

Apple — and Google, Amazon, and others — should absolutely implement the features needed for parents to control when and how any purchase, in-app or not, by their children or anyone else are made on their devices. Apple, based on everything outlined above, seems to be not only doing that, but consistently improving it. Most recently:

iOS 7, the current version, added a Kids category to the App Store. Apple regulates the Kids category even more strictly than the general App Store and provides age ratings so you can find only age appropriate material for your kids.
iOS 8, scheduled for release later this year, will further increase parental control by introducing Family Sharing with Ask to Buy, so parents can keep children on their iTunes account, give them the password, and still be notified and be able to individually approve or deny, an purchase. Apple showed it off this past June at WWDC 2014 to millions and millions of people around the world, including the EU.

Developers also have to shoulder their fair share of responsibility. Apple is already damned if they do, damned if they don't — castigated for being too controlling and yet not controlling enough.

Instead of demanding that every potential vector for error or abuse be eliminated at the platform level — an impossible task — developers who are clearly abusing the system by deliberately targeting children and misleading consumers should face direct attention from the FTC and EU, and from customers who feel cheated. That would put the fear where it really belongs.

Bottom line

In-app purchases can seem like complicated, confusing things. That's a problem that needs to be solved by platform owners like Apple, and also developers, and customers. Without everyone taking responsibility for their parts and working together to make the system better, there's no solution, regulated or not, that'll work.

At the end of the day, however, every system can be better, every developer can be better, but it all comes down to the parent. Parents are the last, best line of defense. If you're a parent, get informed and take control. If you do, there are already more than enough tools to keep both your iTunes account and your children safe.