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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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