FTC To Examine Microtransactions In Free-To-Play Games and Apps

A post at GamePolitics points out that the Federal Trade Commission will be looking into free-to-play mobile games that rely on internal microtransactions as a business model. Many such games are marketed for children, and there have been a spate of cases where kids racked up huge bills without their parents' knowledge or explicit consent. "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.'"

Comments

Price

[devxo]

'Parents need to know that the promotion of games and the delivery mechanism for them are deceptively cheap,'

Why? Delivery mechanism and its costs hardly matter, it's the content. In fact seller should be allowed to give their services any price they want.

Re:Price

[PhilHibbs]

Children can't be held to a contract. If a child is playing a game, and they make a purchase within that game, can they be held to it? This is an issue for adults as well, generally purchases are subject to a return period, does that apply to online transactions? If not, why not? Shouldn't I be able to return that $99 cartload of Smurfberries that my 11 year old clicked on?

Re:Price

[Anonymous Coward]

can children go into a brick store and make a purchase? can they be held to it?

a business is not required to accept returns. many do, and most that don't will offer replacement or exchange for store credit.

Re:Price

[loustic]

$99 for a wagon of Smurfberries

OMG. I should start selling those.

Re:Price

[Scorch_Mechanic]

Because what you don't know will hurt you. Believe me, were I a parent I'd like to know exactly how these microtransaction games worked before I handed a portable money hole to my child. What the base game is, what you can do without spending money, what you can do by spending money, and exactly how the money-spending mechanics work are all must-know pieces of information. Note that this is completely aside from my almost complete (curse you Mann-conomy!) aversion to games with microtransactions. Given the choice (which one ALWAYS HAS) I'll simply do without them. How the publisher delivers content and what the publisher charges for it is up to the publisher, true. This does not mean the publisher is excused from misleading the child, and the parent is excused for not educating the child on the nature of money.

Re:Price

[Ost99]

In the civilized world children (age varies by country, here it's 15 years) are not held to purchases above trivial sums without the parents consent.

Re:Price

[NickyNack]

At least Google added that return policy to the apps in Android Market. Too bad they only give you 15 minutes so you won't be able to download the full app until it is too late to return it...

Re:Price

[Jiro]

I don't get it. That's a peculiar turn of phrase. Is there some point which is not in the "civilized world" which you are concerned about?

(And if you're a European using the phrase to imply that the USA is not civilized, which 95% of uses of that phrase seem to be, the US does indeed have such laws.)

Re:Price

[Ost99]

Read in the context of the P and GP.
Just trying to poke holes in the "truth by rhetorical question" technique the AC uses.

Re:Price

[Teancum]

This is implying that you live in a place where the rule of law prevails instead of thuggery and oppression of a strong bully who simply bashes your head in because he hates the way you smell or got turned down for sex from his wife last night. "Civilized world" does not happen for all people in all places, and unfortunately even in places like America it can be a problem where life is less than civilized. Some times even police officers are little better than semi-organized gang bangers who largely get away with tactics and principles normally ascribed to "organized criminal syndicates". The reason that happens less often is largely because some police officers do try to put on a professional attitude and grow a conscience. Police and military officials who submit to civilian authority tend to be less of a concern, but clearly that is not always true.

If an intelligent judge looks at a "contract" that a child has supposedly entered into, the proper response is that the kid didn't have the experience or necessary tools to be able to understand the subtle requirements of the legal system. It is said that ignorance of the law is not an excuse if you break laws, but that gets ridiculous if you expect an eight year old to be able to intelligently read much less comprehend contract law and be able to make a rational decision based upon legal fine print.

Re:Price

[InsaneMosquito]

It had been 24 hours. They dropped it to 15 minutes.

Re:Price

[Teancum]

If it is an on-line game that allows you to sign up via a common web browser and the kid somehow finds your credit card while you are sleeping, should you be required to honor those charges? Clearly your kid was "stealing your identity" when the contract was signed in a situation like that, but I say the problem is also that "on-line identity" is a difficult problem without some sort of biometric feedback.

I consider "biometric" identity to be the only real proof, be that a signature scribbled by pen, a finger print, retinal scan, or DNA sample. The problem with "identity theft" is when "proof of identity" has not been properly established. Knowing the maiden name of somebody's mother is not "proof of identity", nor is knowledge of bank account numbers or government issued certificate numbers. If you can't really prove who really entered into the contract, it is a joke that the contract actually means something.

I agree with your point, however, that you shouldn't open yourself up to potential dangers by setting up some system where a child can rack up charges on an unlimited basis, be that micro transactions in a game or text messages on a cell phone. For cell phones, I buy the pre-paid cell phones for my kids, and when they use up all of the minutes, I simply say "tough luck" as they have to wait until I can afford to put some more air-time on the phone. If I would permit my kids to play an on-line game, it would have to be in a similar situation where I would assign some trivial amount of money to an account and when it hit the limit, I would not feel obliged to be paying any more.

BTW, I got into a similar tiff with a mail-order book publisher where my kid signed up for a "monthly subscription" when he purchased a book through his elementary school teacher (one of those semi-annoying fliers that teachers often send home with the kids from book publishers) and then a series of other things started to arrive at our home with his name on it. He purchased the book with his allowance money (it was about $10 or so) and filled out his name and stuff without even running it by me. After about six months, I got this annoying bill collector who got on my case demanding payment of about $100 for this extra stuff. I basically told the idiot "I'll see you in court if you care" as the contract was signed by a minor and that the merchandise was unsolicited mail. The guy on the phone said he would ruin my credit rating, and then I responded "How?". It never showed up on my credit report (I did check) and I never got a subpoena to appear in court. Essentially, the company took the loss and ignored me, as I've ignored them.

Re:Price

[Dunbal]

But the parent is the owner of the credit card and they most certainly can be held to contract. Take your kid to a restaurant and have him order whatever he wants. You, the parent, will be billed for it. Unless of course you go to one of these eateries that claims "kids under (age) eat free!". You cannot duck parental responsibility in this way. If you give your kid unsupervised access to your credit card this is an opportunity to actually BE a parent and establish consequences and boundaries. Not complain to the damned FTC...

Re:Price

[Dunbal]

should you be required to honor those charges?

You should a) not honor the charges and report your child to the authorities for credit card fraud/theft, be a witness against the child at the trial, etc or b) actually be the parent and discipline the child, and pay the damned bill.

Re:Price

[mehrotra.akash]

If your kid was to take a bunch of cash from home and spend it at the resturant/ movies,etc. do you have a right to ask for it back from the business owners?? Or would you discipline the child?

Re:Price

[PhilHibbs]

OK, to a certain extent I agree with you, but if your kid guesses or shoulder-surfs your password, is that the same as giving them "unsupervised access to your credit card"? That's what happened in this case - but, as the article says, they did get refunds from Apple.

Re:Price

[Anonymous Coward]

But the parent is the owner of the credit card and they most certainly can be held to contract. Take your kid to a restaurant and have him order whatever he wants. You, the parent, will be billed for it. Unless of course you go to one of these eateries that claims "kids under (age) eat free!". You cannot duck parental responsibility in this way. If you give your kid unsupervised access to your credit card this is an opportunity to actually BE a parent and establish consequences and boundaries. Not complain to the damned FTC...

I fully agree with your point, but your analogy is incorrect.

At a restaurant you are sitting there and you have the option to tell the waiter they want the chicken tenders, not the fillet. These kids were unsupervised and pushing buttons to spend real cash. A correct analogy is more along the lines of a card being taken from the wallet and used to buy a game on Steam, Amazon or whatever. The difference is there is malicious intent in physically removing the card.

As a parent I would have them toiling in the neighborhood yards to pay off the debt. However a young child just may not have know the difference between $10 USD and $10 SmurfBucks. They just rentered the family iTunes password simply because they were asked. We always bitch about M$ users clicking whatever gets them out of the dialog fastest.

Unless you got boned on the contract, your card holder agreement only holds authorized card holders to the payment schedule. I read all of my CC agreements, and I suggest everyone else do so as well.

Re:Price

[Dunbal]

Unless you got boned on the contract, your card holder agreement only holds authorized card holders to the payment schedule. I read all of my CC agreements, and I suggest everyone else do so as well.

Then you may have read the part that says you are responsible for all fradulent charges made on your credit card UNLESS you report the theft/unauthorized use to the bank/issuing company immediately.

Re:Price

[gclef]

I consider "biometric" identity to be the only real proof, be that a signature scribbled by pen, a finger print, retinal scan, or DNA sample. The problem with "identity theft" is when "proof of identity" has not been properly established.

Even then, once it's digitized it's not really proof of identity. For example, if I know how your retina scanner represents your eye on the wire, what's to stop me from sending the bitstream that corresponds to "teancum's left retina" when challenged?

Re:Price

[bluefoxlucid]

The US is civilized, but it's still a third world country.

Re:Price

[omnichad]

In this case, nothing of real value would have been sold. Certainly the owners wouldn't be losing anything other than potential revenue.

Re:Price

[omnichad]

In-App purchases from Apple in iOS are incredibly convenient, but they are definitely the fault here. The same password that you have to give your kid to install free apps is the same password needed to authorize the in-app purchase.

Re:Price

[mehrotra.akash]

Progressives ??

Re:Price

[WhirlwindMonk]

or c) Call up the credit card company and say "My 10 year old got ahold of my credit card and bought $300 worth of smurfberries without my permission. Is it possible to have those charges cancelled? I need to know whether I need to beat him, or beat him and put him to work for a month to pay off his debt."

Re:Price

[Teancum]

The issue here isn't access to a bunch of cash. I know full well where my wallet is most of the time, although I know it is the same thing with a credit card. Presumably if I had a huge pile of cash, I'd keep it at a bank or in a safe that my kids wouldn't know the combination.

The issue here is should I be bound to honor a contract that promises payment for services I didn't agree to in the first place, and to which that contract wasn't signed by me. Moreover, if the contract was knowingly and willingly entered into by the business where they knew full well that it is clearly a child who has agreed to the terms of the contract, why should they expect that contract to be honored?

Children are not capable of understanding the full meaning of a contract, and there are people who prey upon that fact by setting up conditions that are deliberately difficult to understand yet are embarrassingly easy to run up charges without even thinking about it. That is why the Federal Trade Commission is deliberately going after these guys and trying to impose regulations on this whole mess.... because these businesses are deliberately trying to take advantage of a vulnerable age group.

I see similar problems with college freshmen getting piles of credit card applications and charging up a mountain of debt that hangs with them for the rest of their lifetime, but by that point in their life they ought to be able to comprehend the concept of a contract. Unfortunately even then a kid is usually not taught about such contracts until it is too late to do anything about it. Targeting grade school kids is just over the top and should be stopped.

Yes, I get the notion that parents should discipline their kids too and teach them not to get involved in scams at an early age. I certainly try to teach my kids about this issue even now and warn them not to get hyped up over this kind of activity. Still, there is no reason the contract should be honored if it wasn't signed by an adult.

Re:Price

[operagost]

I'm sure I ate a box or two in the 1980s. If only I had known! I'm sure even a stale 30 year old box could net $50, and that's a great return on an investment! Smurf-berry crunch-is-fun-to-eeeeeeeat

Re:Price

[Teancum]

While this is getting very much off-topic from the main point of the thread, I think the problem here is the difference between confirming identity and establishing identity.

Establishment of identity needs to be done in person, where that established identity is then certified in some manner with strong crypto-security such as a public/private encryption method. I'm talking something much stronger than a 512-bit or better yet a 4096-bit hash (SHA-2 or equivalent) that is algorithmicly difficult to perform. Such identity establishment is almost never done, and I am asserting that such identity establishment can't be performed on-line. It is a mistake to believe that it ever could be.

As for who would be responsible for establishing such identity, that could either be a government agency or a private business (my preference) that could perform such a service. A bank, for instance, could offer such a service for its customers where you would have to physically go down to a bank branch office and meet some bank officer who would certify your identity, look at your driver's license photo, perform a retinal scan, or do something else similar where the identity is firmly established for who you are. If an imposter tries to assume your identity, it would be easily caught. Retinal scans, for instance, would catch even identical twins trying to pass off as the other twin assuming identity.

Once the identity is established, using the "key" for on-line transactions certainly could be done, where you "sign" the document with a hash that can be unlocked proving that you in fact were the one who engaged in the contract. Using a government issued serial number isn't the same kind of proof. Credit cards have a 4-digit "hash" and often checksums are but a single digit. How hard is it to brute force a search of acceptable "passwords" if you have as few as 10k possible options? Let's be real here. That isn't "proof" of identity, it was merely a lucky guess and such information is often in the public domain of available knowledge. Information such as your mother's maiden name or the name of your 3rd grade teacher is in theory publicly available information and can be obtained if somebody really wants to know something about your life.

Re:Price

[mehrotra.akash]

This reasoning leads to the piracy != lost revenue debate..

Re:Price

[HiThere]

It's unreasonable for anybody except a lawyer, and to just about anybody except a lawyer. There are more laws than you could read if you didn't do anything but read laws. And I'm not even requiring understanding. I've seen a specialized collection of state laws covering one aspect of the legal system, and it encompassed two floor to ceiling bookcases, each more than six feet wide (and about 10-12 feet tall). But this covered only the aspect of contract law pertaining to governmental agencies contracting with non-governmental agencies.

UCIA2-b was itself over 2,000 pages long. That's not the version that became federal law regulating trade in some circumstances. The actual one was longer, but I didn't hear how much longer.

Ignorance of the law is a continual state of existence among citizens of the US. What you can reasonably expected to know is something far different. You can be expected to know that it's illegal to murder, cheat, steal, etc. But the details of just what the law is on those cases isn't even understood by attorneys in the field. They always need to do extensive research to prepare for any particular case for which they are hired.

Do you know under what circumstances it is legal to cross the street? Probably you've got about as good an idea as the policeman watching you, but nuanced differently. You know what to avoid so that he probably won't get on your case. He knows what he can get away with giving you a ticket for. Neither of you knows what the law really says, and neither would your lawyer if it came to that. If it came to that, neither would the judge. He would DECIDE what the law meant, guided by what the law said, and by what other judges as decided in similar circumstances. (And he would also decide what counted as similar.)

The law is the kind of program you might get if all programmers were spaghetti coders, and every alpha 0.01 version was released as working code, and only patched much later (if the flaws were excessively apparent). You also need to factor in that a lot of the programmers were employed by different groups to achieve different goals. And that's still an oversimplification. Nobody can understand that mess, and there's no reason anyone should expect them to be able to.

Re:Price

[mehrotra.akash]

Considering that most banks send a message for each transaction you make using a credit card, and call you up if there is a deviation from your normal expenditure habits, after the child has made a few wrong payments, it should be absolutely clear to the parent that something wrong is going on.. Though I dont understand how a child was able to charge their parents credit card. You need the CC number, CVV number, Date, Cardholders name, billing address and a secret password .. Mobile and IVR transactions require a one time password. If an 8 yr old managed to do the above correctly multiple times, he is a genius

Re:Price

[bluefoxlucid]

In this case we're dealing with shit simpler than even copyright. While downloading a song/movie is subject to transfer of a good to your possession (a good of digital bits and bytes) and a flawed argument over the value of information (I'm tired of people thinking, "It costs nothing to get infinite copies of the final product to infinite people, therefor the work that went into the final product is valueless," or "Okay, the work has a value, but find another way to get money for it than making me pay you to get it!")......... online games are online games. If you buy 2000 hours of MMO time, and a week later you get a complaint about it, you cancel the 2000 hours. Eat the 5 days, or charge the $3 for the access, or what (yes, that's reasonable-- moreso if it's $90/mo access and you're changing even 3x op costs for the week of access you gave rather than 15 times your op costs). If you sell in-game real estate, the margin is 100%; get a complaint, then delete the in-game real estate and refund. No matter.

Re:Price

[bluefoxlucid]

The challenge includes a randomly-generated one-use public key and the response is encrypted with it. I know I created this key for this session, I verify the response by decrypting it with the private key and then discard all that. There is no MitM attack for this.

I also invented the one-way no-acid chip for this purpose. The chip is immune to all chemical decay attacks (that's not to say the chemicals don't work; I designed it so that you can't get into the chip that way without destroying it. You will need a high-accuracy nanometer targeting laser to strip the housing off the chip and get at the circuit in a nondestructive manner). It's overkill though: reverse engineering the chip is a waste, too expensive, takes too long. The scheme I cooked up makes this stupid, so I don't really care.

The idea for THAT though was based around a 100% perfect security credit system within current capabilities. That means it has full security of what we're capable of in any context (availability is a security concern, just destroying the card isn't an option). I considered ALL use cases. There were minor trade-offs. It's been refined over the years, and I think I've got it right this time... I should probably hire a lawyer to sit with me (as in be present) and propose this to a bank.

Re:Price

[alva_edison]

If your kid was to take a bunch of cash from home and spend it at the resturant/ movies,etc. do you have a right to ask for it back from the business owners?? Or would you discipline the child?

It depends on the etc.
If whatever was bought was consumable, then you don't have a right to get it back (in this case, a concert/movie is consumable, a souvenir of such is not). However, if it was not consumable (I would put electronic purchase in this category), then you should be able to get a refund. Especially in the case of a high-end purchase by a minor (say an amount that would bump from misdemeanor to felony).
However, this would depend on whether there was any wear/tear on the product (which should not be possible for electronic purchases).

Also, false dilemma.

Re:Price

[SleazyRidr]

Is there a nuanced joke in there that I'm not getting? Isn't the definition of a first world country "The USA and its allies in the cold war." (Second world being the USSR and its allies, with third world being unaligned countries.)

Hence the use of the term civilized world (with a far more open meaning) to exclude the USA, rather than risk looking foolish.

Re:Price

[Teancum]

I was merely pointing out that ignorance of the law is not a valid defense in a court room. Yes, I happen to agree with you that it is absurd that any given individual actually have memorized the entire legal code and all judicial rulings (especially in a "common law" country or region) that pertain to a particular situation.

On the other hand, if I ever get a ticket or have to go into a court room, nearly the first thing I have done in order to prepare a defense is to read the actual legal code and as many judicial rulings on the incident that I can. Far more often than not if a police officer has issued a ticket to me or I've been cited for something, I usually decide after reading the code that yes I am guilty of the offense. This isn't to say that a police officer is always correct (they certainly aren't trained lawyers), but a professional law enforcement officer more often than not does now the laws regarding the situations they commonly deal with.

Still, when it comes to juvenile courts, judges tend to be much more lenient in criminal situations and do take into account ignorance of the law knowing full well that ordinary children are still trying to learn things about this world of ours and that sometimes they do impulsive and irresponsible behavior merely because they didn't know any better. If it was a civil dispute (aka a lawsuit trying to enforce some fine or penalty) and it turns out that a child is one of the parties involved, the typical reaction of most judges based both on common practice and in most cases statutory law.... they will decide in favor of the child or simply dismiss the case altogether if somebody is trying to sue the child. Children simply are not held liable for those kind of issues.

Property damage by a child can and does involve the parents of that child, and I know full well that if my kids do mayhem that I am responsible for that damage, but a child can't sign a contract. That is the point and those who are trying to argue that a kid can consent to a contract simply don't get it.

Re:Another win for selfish, irresponsible loudmout

[Anonymous Coward]

In all honesty, they are two completely different issues. I have a problem with any app that relies microtransactions and gameplay that exploit well known weaknesses inherant to humans neural network to turn a massive profit.

I'd place these social games up there with gambling and alcohol.

Re:Another win for selfish, irresponsible loudmout

[Anonymous Coward]

Yes, no need for the world to be a pleasant place to live when instead we can be on constant vigil for every sort of scam imaginable. One of the functions of civilization is to reduce the need to constantly watch for predators.

Perhaps the answer is

[DrXym]

Don't buy your kids smart phones. And if you do, don't set them up with unlimited accounts on the market / app store. Better yet, would be if the market / app store allowed the account holder to prohibit certain kinds of transaction, e.g. in-game purchases and games that depended on it would flag themselves as such so they weren't shown to the user.

That said, apps that encourage kids to spend real money for shit like costumes etc. are treading on moral thin ice. The better ones would separate the concepts of player and account holder, put limits on the amount that could be spend by a child, and would put tools in for the parent to further restrict / shape the experience as they saw fit.

Re:Perhaps the answer is

[Richard_at_work]

That said, apps that encourage kids to spend real money for shit like costumes etc. are treading on moral thin ice..

How is this any different than the collectable card series that were highly prevelent throughout my childhood - football, baseball, TMNT, Battlestar Galactica, and then on to the collectable card games like Spellfire, Magic etc etc. Not to mention the crap that came along with the interest in Warhammer 40K (what a scam! I occassionally pop into my local store to see what they are doing, and the prices are even more ludicrous today!) and the various AD&D packs.

Kids have been encouraged to buy tat for decades, this isn't new and it isn't any different than back in my youth.

Besides, what kind of a parent links a credit card to a childs iTunes account? Where are these kids getting $99 to spend on crap?

Re:Perhaps the answer is

[DrXym]

How is this any different than the collectable card series that were highly prevelent throughout my childhood - football, baseball, TMNT, Battlestar Galactica, and then on to the collectable card games like Spellfire, Magic etc etc. Not to mention the crap that came along with the interest in Warhammer 40K (what a scam! I occassionally pop into my local store to see what they are doing, and the prices are even more ludicrous today!) and the various AD&D packs.

Kids have been encouraged to buy tat for decades, this isn't new and it isn't any different than back in my youth.

Besides, what kind of a parent links a credit card to a childs iTunes account? Where are these kids getting $99 to spend on crap?

I think you know how it's different. Chances are that your parents directly supervised you when you bought your cards. Or if you were older and allowed to buy stuff by yourself you did so with an allowance. Either way there was direct control over how much you bought. And if you had raided their wallets to buy more they would almost certainly have noticed the missing money far more quickly. They might also notice the suspicious number of empty game wrappers & stacks of cards floating around the house. They might even have received a call from the local store or the school about the suspiciously about the number of cards you were purchasing. Aside from all that you as a kid bought your cards with hard cash, not smurfberries or some other ethereal point system designed to cause you to disassociate the worth of the item.

The point is that all this human interaction and control needs to have as good a counterpart in the digital world. Parents need to be able to control kids spending and expect reasonable protections to be offered by the system. Responsible kid games and infrastructures should impose spending / credit hard limits as a failsafe and account holders should have tools to further limit spending and receive delivery notifications / reports of spending habits. All transactions should also be conducted in a real currency not "smurfberries" or whatever so the kid themselves has a handle on what they're spending.

I realise that some games and stores may be close to that already. But given that we hear reports of abuses I don't think it would be wrong to issue code of conduct guidelines and possibly changes to the ratings system to ensure games abide by them.

Re:Perhaps the answer is

[Ost99]

Besides, what kind of a parent links a credit card to a childs iTunes account? Where are these kids getting $99 to spend on crap?

Most children in the target audience for the Smufts use their parents phone / ipad, not their own.
We're talking 3-6 year old kids, and a GUI that deliberately obfuscates buy process to hide the fact that it involves real money.
The entire business model is "tricking children".

If there ever was anything the walled garden of Apple should protect the iPeople from, it's fraud like this.

Re:Perhaps the answer is

[Dachannien]

How is this any different than the collectable card series that were highly prevelent throughout my childhood - football, baseball, TMNT, Battlestar Galactica, and then on to the collectable card games like Spellfire, Magic etc etc. Not to mention the crap that came along with the interest in Warhammer 40K (what a scam! I occassionally pop into my local store to see what they are doing, and the prices are even more ludicrous today!) and the various AD&D packs.

Because when you were a kid, you had to bring actual physical cash to the comic book store to buy that stuff.

The transactions the FTC is looking at don't even require a credit card (at least, not in the child's possession) - just touch some smurfberries on your iPhone and you've bought $100 of worthless virtual crap.

Re:Perhaps the answer is

[Richard_at_work]

I think you know how it's different. Chances are that your parents directly supervised you when you bought your cards. Or if you were older and allowed to buy stuff by yourself you did so with an allowance. Either way there was direct control over how much you bought. And if you had raided their wallets to buy more they would almost certainly have noticed the missing money far more quickly. They might also notice the suspicious number of empty game wrappers & stacks of cards floating around the house. They might even have received a call from the local store or the school about the suspiciously about the number of cards you were purchasing. Aside from all that you as a kid bought your cards with hard cash, not smurfberries or some other ethereal point system designed to cause you to disassociate the worth of the item.

I still don't see how its different - kids are buying stuff marketed directly to them.

I do find it quite interesting that you bring up parental supervision and adult intervention, when that is precisely what is missing in the first place from the issues in this article - the parents are allowing it to happen. And thats still no different to my experiences in childhood...

No, my parents were not there when I bought my trading cards - yes I had an allowance beyond which it was impossible to go, but why is that not the case with these online games? As I said in my original post, which idiot is linking their credit card to their childs iTunes account and letting them go wild? How can that even be considered good parenting? And if you must link your card to their iTunes account, why are you not denying them the passwords?

No, there were no empty game wrappers to be seen - practically everyone I knew had the wrappers off and either on the floor or in the bin before they were out of the shop door because you wanted to see what cards you had. And again no, the shop keepers didn't care if you were buying $10 worth of cards in one go, or were coming back time and again. And yet again no, school teachers didn't care that kids were bringing in shoeboxes full of cards every day. It was all done very openly in the playground or wherever, and no one batted an eyelid.

My parents didn't care either that I had lots of cards, and that cards came and went. Never raised an eyebrow, even when my collection in one game came to well over 8,000 cards. But it wasn't an issue for me - I used my allowance and I did chores to earn those cards, I'm guessing the whole point of this story is that kids are resorting to stealing credit card details or money from their parents, or pushing their parents to top up their balances or what not. Again, more of a problem with the parenting than anything else.

Why isn't there direct control from the parent in this case? Wheres the parenting?!

The point is that all this human interaction and control needs to have as good a counterpart in the digital world. Parents need to be able to control kids spending and expect reasonable protections to be offered by the system. Responsible kid games and infrastructures should impose spending / credit hard limits as a failsafe and account holders should have tools to further limit spending and receive delivery notifications / reports of spending habits. All transactions should also be conducted in a real currency not "smurfberries" or whatever so the kid themselves has a handle on what they're spending.

There should already be an easy way to cap the amount a kid can spend - don't give them access to the funds. Problem solved - these games aren't going to extend kids credit to collect at a later date (they can't, it would be unenforceable), so where is the money coming from ultimately?

Its all coming back to the parents I think. And they need someone to blame other than themselves...

Re:Perhaps the answer is

[Richard_at_work]

Well, to do in-app purchases on the iPhone or iPad, you need to confirm your iTunes password - why do the kids have that? And if the apps are doing purchases directly (which is against Apples rules...) then they need to input card details - why do the kids have those?

Its not a straight "click here - oooh look we just debited your account a hundred bucks", there are already road blocks in place.

Re:Perhaps the answer is

[sgtrock]

Actually, it's easy enough to create the same sort of situation. Many U.S. banks have offered limited fund debit cards for years. Just set one up for a kid and load it up once a month as part of their allowance. If a kid maxes it out buying online toys, how is that any different from when I used to spend my entire allowance on Spiderman and Batman comic books?

Re:Perhaps the answer is

[Ost99]

Well, to do in-app purchases on the iPhone or iPad, you need to confirm your iTunes password - why do the kids have that? And if the apps are doing purchases directly (which is against Apples rules...) then they need to input card details - why do the kids have those?

Wrong.
iOS caches the password from marketplace purchases, and is used in-game without any dialogs until the cache timeout is reached.

Its not a straight "click here - oooh look we just debited your account a hundred bucks", there are already road blocks in place.

Whatever roadblocks are in place, they are not sufficient. There's been examples of in-game purchases for over $1000 with cached passwords.

Re:Perhaps the answer is

[SanityInAnarchy]

That said, apps that encourage kids to spend real money for shit like costumes etc. are treading on moral thin ice.

So I have to ask...

Isn't this something the App Store was supposed to protect you with? At least according to Apple, who've generally tried to ban porn, you'd think they'd also ban apps which deliberately exploit children. I'm not saying I want Apple to ban anything, but they are pretty damned capricious about what they choose to ban or not.

Maybe I'm not being cynical enough. Maybe the difference is the amount of money these bring in...

Re:Perhaps the answer is

[Chelloveck]

Many U.S. banks have offered limited fund debit cards for years. Just set one up for a kid and load it up once a month as part of their allowance.

I looked into that for my teenage son. It's a great concept, smothered by fees. Some of those cards charge several dollars each time you add more money to the account. A $2.50/deposit transaction fee is ridiculous when I'm depositing $5 at a time. Other charges for checking the balance, ATM withdrawals, and so forth pretty much nickel and dime the account to death.

Read the terms closely! And if you find a good one, drop me a line. I haven't been able to find one that's worthwhile for someone averaging $5 to $10 a week.

Re:Perhaps the answer is

[Richard_at_work]

That caching is very short - I know that Im typing my password in once or twice a day on my iPad! So why is the parent typing in their password constantly?

Stop trying to exonerate the parents from blame.

Re:Perhaps the answer is

[Ost99]

That caching is very short - I know that Im typing my password in once or twice a day on my iPad! So why is the parent typing in their password constantly?

Now you're just being stupid.
For the fraud to work the kids just have to have access to the device with a cached password once, there is no "typing in their password constantly ".

For the record the cache time is 15 minutes. So if the kids happen to play within 15 minutes of the parents buying anything, there's a high probability of hundreds or thousands of $ being charged to the account. This only needs to happen for a very small percentage of users to become very profitable.

Stop trying to exonerate the parents from blame.

Stop trying to exonerate Apple from blame. They help facilitate fraud.
Walled garden my ass.

Re:Perhaps the answer is

[Richard_at_work]

I'm being stupid? Fuck me, and I thought it was common sense to not give kids access to unlimited funds.

Why are the parents typing in the password in the first place? Why does that iTunes account have a credit card linked to it? WHERE IS THE PARENTAL RESPONSIBILITY IN ALL OF THIS?!

Oh, wait, if the parent can blame someone else, then they don't have to shoulder the shame of being a poor parent. Seems to be the way of the world these days.

Re:Perhaps the answer is

[halowolf]

It's also a good idea to configure iTunes so that it always asks to confirm when purchasing something rather than checkbox-ing that dialog away.

Whenever I am considering a purchase from the App store I read other users comments. There are endless complaints about apps that have micro payment systems installed, and about apps that are listed as free but require an in-app purchase to activate and use (that I consider most misleading and refuse to buy them just on principle).

Re:Perhaps the answer is

[omnichad]

You have to tie a credit card to the iTunes account to install a 99 cent game. A password is required to install a free game. In-App purchases use the same password (as do paid apps).

Re:Perhaps the answer is

[omnichad]

Because when you were a kid, you had to bring actual physical cash to the comic book store to buy that stuff.

Yes, that and the fact that you have a physical comic book that you can keep for a lifetime and/or sell.

Re:Perhaps the answer is

[Richard_at_work]

You don't need to tie a credit card to an iTunes account - my wife has one which is funded solely through iTunes gift cards, never had a credit card associated with it.

And in any case, why do these kids have access to the password?

Re:Perhaps the answer is

[omnichad]

Well you can expect less technically minded parents to put in a credit card for a 99 cent game. And then expect to have the password protect against unauthorized purchases. Problem with iOS is that if the parent enters the password to install a free game like this Smurf game, the password is cached for some time. If the kid immediately plays the game, they can make in-app purchases *without* the password.
 
The problem isn't credit card paranoia. Good for your wife that she doesn't have to tie a credit card in - I don't care!! It's the lack of secure defaults, and making it too easy for these scams to exist, not evil credit cards.

Re:Perhaps the answer is

[Ost99]

The parents never intend to give the kids access to the password or the credit card, the broken iOS design does that for them.

IF the owner has bought ANYTHING from the marketplace the past 15 minutes before the kid starts Smurfville: Poof the money is gone.
Non-technical people will not understand that the default options for password caching can cause this.

There is no poor parenting involved here at all, just broken design (from Apple), fraud (creators of Smurfville) and poor technical skills in the general population.

What part is irresponsible on the parents part?
1) Letting the kids play with an iDevice?
2) Having a credit card linked to their own iTunes account (NOT the kids account, 4 year olds doesn't have one)
3) Letting the kids play with an iDevice within 15 minutes of the parent buying something *totally* unrelated with the iTunes account?

In a normal persons head, none of the above should result in hundreds or thousands of $ charged to their credit card, yet that's what happens.

And just to be clear, selling virtual goods at $99 a pop in a game meant for children is in itself totally unacceptable.

Re:Perhaps the answer is

[mehrotra.akash]

We have much better ones in India.. being in US, I guess you'll find better deals.. for students, maintain a QAB of Rs1000($20) and an annual charge of Rs100($2) and that it..

Re:Perhaps the answer is

[tlhIngan]

Actually, it's easy enough to create the same sort of situation. Many U.S. banks have offered limited fund debit cards for years. Just set one up for a kid and load it up once a month as part of their allowance. If a kid maxes it out buying online toys, how is that any different from when I used to spend my entire allowance on Spiderman and Batman comic books?

You can do it with iTunes as well - your iTunes account can be funded with iTunes gift cards easily. And I'm seeing discounted iTunes cards for retail sale quite often nowadays - seems some retailer or other is offering the $25 card for $20 or the $50 card for $40. The max they can do is drain the gift card away.

I had removed the credit card off my account during that whole scare over iTunes accounts being hacked, and funding it from gift cards on sale. Not a bad deal, either.

Re:Perhaps the answer is

[Darinbob]

But if you don't buy your kids smart phones now, how will they ever grow up to become self absorbed yuppie scum?

Re:Perhaps the answer is

[Stuarticus]

Are you a complete moron? Do you have any children? Particularly in this age range they are going to make stupid mistakes, you expect parents to pay hundreds of dollars to cover those when the only consequence of them is a few ones and zeroes copied from A to B for a short period?

You seem to be being deliberately obtuse in this matter.

"Micro-transaction"?

[the_raptor]

$19, let alone $99, is not a bloody "micro-transaction". The original micro-transaction idea was talking about sub-dollar amounts (eg 5 cents to view a web page). Now days idiot games/web journalists apply the term to mean "online trading of money for in game goods and services".

Re:"Micro-transaction"?

[ozbon]

Yeah, these big amounts (in the context of a 99 cent game) are ridiculous.

I love the concept of true micropayments, and think it's got a huge market. (Hell, AppStores etc. are proof of that - look at Angry Birds taking more than $1m per day over the Christmas Season) But this add-one stuff that's maybe 200% or 2000% of the original app purchase is just insane.

(Note : I feel the same about add-on packs for cars etc., where you end up spending [significant percentage of car's original price] on upgrades, sports packs etc.

Re:"Micro-transaction"?

[the_raptor]

I see it abused so often that I didn't even check the articles (*shock*). Also some places don't have any physical currency like a single cent any more. Australia went to 5 cent coins as the lowest denomination a long time ago. The micro-transaction idea originally was about alternative payment systems for purchases so small that it wouldn't be worth it to pull a credit card out. Sub-cent prices are possible but the guys interested in it generally were thinking higher.

Re:"Micro-transaction"?

[omnichad]

Typical credit card acceptance costs 15-30 cents per transaction. Micro transactions are a different way of handling debits to allow you to be profitable for sales under $1.00 (or whatever price point makes taking credit cards unfeasible or instantly unprofitable in the particular industry). You can't charge 30 cents for a service directly via credit card and expect to make a reasonable profit without making changes to the card processing fees themselves.

Re:"Micro-transaction"?

[flibbidyfloo]

Can we start calling them "Cyber-transactions"? Please? I love it when we put cyber in front of a word to make a new word!

Re:"Micro-transaction"?

[DrStrange66]

Micro transactions for the government are in the range of billions now. Regular transactions range in the trillions.

Re:"Micro-transaction"?

[The Archon V2.0]

Perhaps, but the gaming media's been calling the smurfberry debacle a problem with micro-transactions for some time now, so it's not only Soulskill.

Those prices...

[RogueyWon]

I've never been anywhere near either of the games mentioned in the summary and can't check their websites from the office. But if those prices quoted for in-game items are correct (and not a case of dollars being switched for cents) then I start to smell a scam.

Surely no parent would ever "ok" a purchase like that from their kids (and these do sound like child-oriented games). I sounds at least plausible therefore (though I can't say more than that without evidence) that some of these games are making it as easy as possible to circumvent payment protections and giving active encouragement to do so.

Normally, my response to such cases is "parents, watch what your kids are doing". Certainly, that mother the other week complaining about MS allowing her kid to spend money on Xbox Live got no sympathy from me. I use Xbox Live myself and know that it has robust protections built in if you take the 10 seconds needed to switch them on. However, if things do start to veer more in the direction of outright scam (and I'm not saying that this does, just that those prices, if correct, might suggest it) then things get a little murkier. It starts to feel more directly like asking kids to steal from their parents, which brings me onto the obligatory Penny Arcade.

Personal Finance

[Israfels]

Where's the parental oversight? He kid could just as easily be making calls to Cambodia and frequenting 1-900 numbers. If they're old enough to make virtual transactions it's a good time to start teaching them about personal finance. If a parent signs a contract with a company and then hands the device that's signed for to his child, the parent is STILL ultimately responsible.

Buying smurfberries with someone else's money after you run out is very common in real life. It's called "raising taxes to fill a budget gap".

Re:Personal Finance

[ThePub2000]

Exactly what I was going to say; "Where is the parenting". Too many people don't think through things at all. Giving a young child a smart phone and unlimited access to a credit card and then turning the consequences on the companies providing you services just means you're a dumb parent.

Most common phrase over the last 20 years? "It wasn't my fault! They're responsible! *pointing finger somewhere else*"

Re:Personal Finance

[ozbon]

Totally agree - this seems to be another case of "Well, no-one was protecting my child!" - do it your damn self.

"mobile apps are the new platform for kids."

I wonder if it's more that mobile apps are the new childminder for kids. Yes, some play games on an iDevice for fun, but it's like TV, I suspect a lot of parents say "Just play on this, little Billy", and let them do that instead of actually spending time with the child.
[/cynicism]

Re:Personal Finance

[0123456]

Fine, no problem, because to you there is no such thing as a scam targeting children, only the parent can be responsible.

The world has been full of scams targeting children for decades at least; when I was young it was cartoons which encouraged kids to demand the latest action figures from their parents, because so many parents are unable to say 'no'.

The difference is that in those days parents weren't giving kids instant access to their credit cards or phone bills to pay for it.

99 dollars for a wagon full of smurfberries

[brokeninside]

That sounds pretty reasonable until you realize that it's a smurf-sized wagon.

Re:99 dollars for a wagon full of smurfberries

[omnichad]

And that a real wagon full of berries is probably about the same price or cheaper.

Surprise Surprise..

[Ventriloquate]

Lack of proper parenting strikes again.

$99 for a wagon of smurfberries?

[Anonymous Coward]

I don't see the problem here, thats a smurfin' great deal, especially when you consider how long it would take to smurf all those berries manually.

iOS - a time-wasting and money-wasting platform

[gustep12]

See, that's where my general sense of unease with all iOS devices comes from: This is a walled garden which is primarily designed to take your time and money (both precious resources by my standards) and generate a nice profit for Apple. Spending money is made so easy it happens almost without you noticing - that is, until you get the bill. Want to power up your device? Press a button? Please register your credit card first. This is like a phishing website turned into hardware.

And all that mostly just for mediocre, (Adobe) flash-game like entertainment. Almost no productivity. The only application for the iPad that I could see is the one I am still waiting for: an iPad which is responsive and accurate enough to actually perform well as a sketch pad for artists, i.e. like a Wacom Cintiq tablet monitor.

Re:iOS - a time-wasting and money-wasting platform

[davidbrit2]

I don't know, my iPhone is pretty stinking productive with Jump Desktop, Wyse PocketCloud, iSSH, Junos Pulse, Citrix Receiver, all the Data Glass apps, and Documents To Go, all of which I use on a fairly regular basis. And none of them has ever offered me any Smurf berries, oddly enough.

Re:iOS - a time-wasting and money-wasting platform

[omnichad]

I did my 2010 taxes 2 weeks ago using TurboTax Snaptax for iOS. It took me literally 15 minutes to enter all my info and that's only because I don't have an iPhone 4 with a camera (or I could take a picture of my W2). The app itself was free. After I saw the amount of my tax refund, I made an in-app purchase of $14.99 to actually file my taxes. It all happened so fast, that I didn't even think twice about the cost - well worth it.

Re:Another win for selfish, irresponsible loudmout

[Elbereth]

It would be interesting if everyone got a chance to try out their pet sociological/political theories, but I think we're probably better off without some of those theories being put to the test. Not that it wouldn't be fun saying, "I told you so!", but the loss of human life would be quite regrettable.

Gambling

[Charliemopps]

This is a storm that's been brewing for years now. On EQ2 servers they sold in-game money for real money, then once you were in the gave there was a goblin that was basically a slot machine... They took the goblin out eventually, but that kind of misses the fact that if they are saying the in-game money has real value, the ENTIRE game is a slot machine.

Re:Gambling

[Divide By Zero]

I'd +1 Interesting if I had any points, but since I don't, I'll offer this:

Even if you can buy "gold" for money, can you sell "gold" and get dollars/euros/etc. back out? I think the problem with the gambling laws is getting cash money for winning the game of chance - if it all stays in the game ecosystem, I don't think it counts. I know Entropia has this mechanic, and they seem to have skirted the law, but I don't know how. If you can sell EQ2 in-game money for real money, this is the first I've heard of it.

Re:Gambling

[140Mandak262Jamuna]

This is a storm that's been brewing for years now. On EQ2 servers they sold in-game money for real money, then once you were in the gave there was a goblin that was basically a slot machine...

Unless they let you cash in the game money for real money, it would not be the same as slot machine. If you could sell your jackpot of game money winnings to other players, but not to the house, would it be counted as "cashing in the winnings"? Anyway as long as the real money goes only one way, it could be dumb, it could be lame, but it is not gambling.

Re:Gambling

[mordenkhai]

There are special servers set up, and if you were on these servers then yes you could through the interface set up by SOE. I assume they are still up as if you go to everquest2.com and hover over "SHOP" you can click the "Exchange" button and get taken to https://exchange.livegamer.com/eqii/

Re:Gambling

[mordenkhai]

They do have server(s) which you can sell your gold to other players for real cash, but I don't know if the goblin is on those servers. You cannot sell to SOE, as they aren't buying.

Re:Gambling

[Charliemopps]

You can sell it to other players and there are plenty of online gold services willing to buy it as well. There was relatively famous case where a player early in the history of EQ2 figured out how to duplicate items in the game by mistake one day and then sell them back to the vendor. He made so much gold doing so that he started selling the gold to other players and online gold shops for real cash. In just a few months he had made over $80,000 before Sony figured it out and patched the bug.

Does that count as "Cashing in"?

Re:Gambling

[Gel214th]

They *skirted* the law by setting up shop in a sensible country, rather than in the US ;-)
Whilst the enormous and very willing US market makes it very attractive for these ventures, the legal and political shenanigans represents a risk.

In my view this is a complete non-issue surrounding transactions that have taken place for decades before the rise of cell phones and facebook.
Methinks someone just wants their cut and is using children to attempt to legislate a mechanism of control.

If these companies were to move their operations to , let's say Sweden, would the FTC even have jurisdiction over in-game transactions?

Problem?

[whisper_jeff]

But basically people are trying to make money off these apps, which is a huge problem...

People are trying to make money off their work? Those bastards!!

Ok, I understand the point he was trying to make and I agree with it - Smurf's Village takes advantage of children to make much more money than is considered "the norm" for the industry but to complain that people are trying to make money off of an app is an utterly stupid complaint.

Intentional Poor UI Design

[mea_culpa]

Devs are intentionally using poor UI design to trap you in to using up the precious 'gems' that you paid real money for.
Team Lava and Strom8 are notorious for this. Team Lava for its new Farmville clone and other themes do not give any confirmation when you accidentally tap the wrong part of the screen. Their policies are to never refund anything.
I hope the FTC throws the book at them.

No excuse for dumb parents...

[Xenious]

Settings->Restrictions->In-App Purchases and turn it Off. Problem solved with no parental excuses. While there are there might as well setup any other restrictions that are needed.

Re:No excuse for dumb parents...

[Alumoi]

What? Where? They never told me I could do this. I'm going to sue!

Re:No excuse for dumb parents...

[interkin3tic]

Settings->Restrictions->In-App Purchases and turn it Off. Problem solved with no parental excuses. While there are there might as well setup any other restrictions that are needed.

Reading TFA:

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.

Getting the password is a much higher barrier than changing a setting, so while changing the setting may have prevented this, I think the older sister would have been able to change that pretty easily. I'd say the real problem is giving your kids access to your credit card indirectly.

That said, charging 15 to 99 dollars for things in a kids game is absurd. I'm not saying we need legislation to protect the kids here, but that's extremely shady on pocket gems' part.

Re:iWasright

[SanityInAnarchy]

I can't really agree, partly because it really looks like Steve Jobs isn't controlling these applications.

part of it is that password is needed for free app

[Joe The Dragon]

part of it is that password is needed for free apps and it after that you don't need the pass word for up to 15 min after that so maybe it free apps did not need a password it would make so it's not so easy to pay for stuff in app.
It's like the directv system free VOD does not need you say yes to buy this for XXX but PPV VOD has a on screen pop up saying do you want to buy X for X.XX yes / no?

Make so no password is needed for free apps but any payed or in app buy for real money has a SYSTEM POP saying do want to pay X for X yes / no and then ask for the pass word.

Rather large micro transactions.

[MytQuinn]

The thing that gets me in the size of the these "micro" transactions. Seriously, $99 for Smurfs on mobile game is crazy, that's the price of 2 full blown console games and all that does is get you in the door to buy more shit. While this an extreme, and obviously exploitative example it is far from uncommon. I mean look at WoW, $15 to dollars to move a character after realizing the server you leveled on has shit for end game potential, this should be a free but limited service to improve the player experience. $15 for a an in game pet, yes I know a portion goes to charity but its a damn pet. Throw in there DLC, I quit playing my Xbox partial because it really pissed me off when I bought Dragon Age and not 10 hours in they where hitting me up for more money to unlock a quest line. A hour or so extra content? Two bucks? Nope more like 15.... WTF does that come a kiss?

While I don't really have a huge problem with the idea of micro transactions, keep them micro. In game item, 1-2 dollars max. Extra hour of content, less than a dollar. Any more then that I can find a plethora of other things in real life that offer more bang of the buck. Personally I evaluate games by price/per of playtime. I refuse to pay $50 for game that is going to keep my attention for less then 50 hours, yes this can include multi-player and overall replayability, any less that and it probably wasn't very fun away.

Just my 2 cents....

This will be interesting.

[Jartan]

Having the FTC look at these games is the last thing some of these games want. For those who aren't aware a lot of them are thinly disguised online gambling.

Usually once you've played a while the best way to power yourself up is to buy some sort of box or item that has a rare chance to really power you up.

People spend thousands trying to get "lucky".

Technically speaking...

[Itesh]

The child is not entering into the contract as children cannot legally purchase cell phones. The parent purchased the phone and signed the contract for the family plan and then handed the phone to a child. If you read the fine print of the terms and conditions of your cell phone company, it basically says "You are responsible for any charges incurred while using the service". So, parents should wise up and set up restrictions or deal with the consequences that will occur if they don't. Doesn't anyone remember 900 numbers for kids from the 80s?

Disappointed again

[GameboyRMH]

When I first started reading the title, I thought it was going to say "FTC to examine Microtrading"

But that would make too much sense :-(