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Lawsuit Reveals How Facebook Profited Off Confused Children: Report (salon.com)
Documents outlining how Facebook profited off children are expected to be made public soon, according to Reveal News of the Center for Investigative Reporting (CIR), who requested the documents. From a report: In a report about the trove of previously-sealed documents, Reveal News explains that Facebook has previously faced lawsuits for failing to refund charges made by children playing games on Facebook. According to Reveal, the children did not know that their parent's credit card was stored on the platform when they clicked "buy," and in some cases, hundreds or even thousands of dollars were spent. In one case, the plaintiff, who is a child, spent several hundreds of dollars in just a few weeks. According to the report, more documents show "widespread confusion by children and their parents, who didn't understand Facebook continued to charge them as they played games."
It's not the parents' fault. These companies were slow to add the concept of child accounts - accounts which had access to the apps purchased by the main account, but which had fewer privileges (including no purchase privilege). As a result, if you as a parent wanted to buy an app for your child's device, you had two choices. Either buy them on your account, and use your account on your child's device. Or buy them on your child's account (add your credit card info to their account). Both solutions end up with the child's device having access to purchase permission.
To be fair, the companies added the ability to require a passcode to be punched in before a purchase would go through. But then as you say, they also gave you the option to have the device remember the passcode so you wouldn't have to punch it in all the time.
Given that children are necessary for the species to survive, the proper solution is to allow child accounts. These are accounts which have access to apps purchased by the parent account, but which have no purchase privileges themselves. I can understand why the companies are reluctant to do it though - it means you can let your friends use the apps you buy by setting them up with a child account. Google added this capability a few years back (dunno about Facebook or Apple), but hasn't publicized it well. So many parents continue to use their main account on their children' devices.