- Created on Thursday, 06 March 2014 11:39
- Written by Latanya Sweeney, Chief Technologist FTC
Washington, DC - Children can perform amazing feats using iPhones and iPads, but an Apple business practice may unfairly bill parents.
In January, the Federal Trade Commission announced a settlement with Apple Inc, in which the company agreed to provide full refunds to consumers, paying a minimum of $32.5 million, to settle a FTC complaint that the company billed consumers for millions of dollars of charges incurred by children in mobile apps without consent . The Complaint  and statements from FTC Commissioners [3,4,5] alone provide FTC's position on the case. Apple has until March 31 to change its billing practices for all apps, not just children's apps. Where is the sweet spot –the change in Apple's practices that complies with the settlement while optimizing benefits to consumers and Apple? Will Apple modify the password pop-up window, change the default settings, introduce profiles, or do something different? In my writing below, I use this opportunity to launch discussion on possible human interface designs for smart device settings.
Before I go any further, let me advise you that I am solely responsible for this blog’s content, characterizations, ideas and choice of topic. This blog may not reflect the views of the FTC or any of its Commissioners.
Apple the Beautiful
I am a huge fan of the look-and-feel of Apple products. My home has iPhones, iPads, MacBooks, Thunderbolt displays, and Apple TV boxes –all that, and its just 3 of us, two adults and a 6-year-old child. It started with me, an exhausted mom in a long checkout line engaging my then 10-month-old infant with pictures on my iPhone. In little time, he could swipe back and forth to see specific pictures. Within a month, I could hand him my phone, and his chubby fingers would swipe it on and navigate to photos. Soon he was shooting his own pictures –a collection that, at age 6, has grown to more than 1000 photographs and videos stored on his own iPad. Eventually, he taught his grandfather to use an iPhone, and now everyone in our extended family –cousins, uncles, and aunts– has an iPhone or iPad.
If it sounds amazing, it is, but far from unusual. Young children regularly dazzle adults with their seemingly innate ability to use iPhones and iPads and parents and teachers are routinely putting the devices in young hands. The limited screen size encourages graphical depictions with few words, and the responsiveness to touch, tilt and acceleration supports direct tactile interaction. A researcher introduced preschoolers to iPads in rural Canada and when she returned to assess progress in 6 weeks she said she was “completely blown away by how proficient the majority of the children had become with the iPad … [and by] the skills that they had learned while they were playing with the applications” . Overall, there is a small but evolving body of research around the world on children learning using iPads and similar tablets with varying degrees of success (e.g., [7,8,9,10,11,12]).
Apple welcomes children and the childhood educational market to use iPads. The company hosts an entire website dedicated to using iPads in education . The website includes teacher resources, descriptions of educational applications for the iPad that boasts 65,000 apps just for education, and a special program for publishing educational books on iPads.
Of course, I have had to guide my son's activity on these devices. After my son forwarded a personal email message to a professional acquaintance using my iPhone, he had to learn which apps were okay to use and which were not. I also learned that some apps are better for him than others. His imagination soared as he navigated within the pyramids of Egypt, and explored galaxies and planets with his fingers. I didn't mind him spending a little more time on apps that developed his mathematical intuition or featured animated books to encourage his reading, but what more could he learn from shaving yet another head of hair in a hair salon app. Experts warn against too much screen time and not enough tangible play in the real world for children (for guidance, see ).
Smart Devices and Apps
Desktop and laptop computers allow you to use programs to perform all kinds of tasks, such as writing, email, drawing, and browsing the Web. Mobile devices (i.e., phones and tablets) capable of running similar kinds of applications are smart devices, and their application programs are apps. iPhones and iPads are smart devices. Programs that run on iPhones and iPads are apps.
Business Models for Apps
The look-and-feel of Apple's smart devices are so intuitive that children can be ardent users of apps, but in turn, do app business practices exploit the intuitive expectations of children and parents?
When my son began his foray, most of his apps were free. Then, some apps offered a free version with internal ads and an ad-free version for a fee, so we purchased apps to avoid ads. Excelling in an app allowed him to accumulate points that he could redeem for rewards within the app. Then, options emerged for purchasing points within the app (“in-app purchases”) rather than earning them. A single in-app purchase ranged from 99 cents to $99.99 so we had to be careful. He used the dollar sign symbol to distinguish. Acquiring a faster car in a driving app would cost real money if the option had a dollar sign or cost points otherwise. One of his apps had two kinds of currencies, points and stars, so it was not clear which kind we were purchasing and different kinds of currency allowed him to do different things and I bought the wrong kind on my first attempt. Another of his apps did not seem to display a dollar sign. Faced only with a prompt to enter my password and no other explanation, even I was uncertain in the haste as to whether I was downloading a related free game or paying for something. Afterwards, I learned I had paid money for points in the app, but the confusion made me uncomfortable, so we deleted the app.
This might sound annoying, but it's been costly for some parents. The critical problem has been that once a parent enters his password, there can be a 15-minute window during which purchases will not request a password. There is no notice, so the parent may be unaware of the 15-minute policy. Repeatedly clicking the same button for an in-app purchase during that time will result in multiple purchases. Some parents learned the hard way the number of times their child could tap the same on-screen button in 15 minutes.
Last year, Apple reached a settlement in a class-action lawsuit that claimed that its app purchase policy did not prevent minor children from running up huge expenses for in-app purchases . Plaintiff Garen Meguerian, who filed the initial class action complaint in a court in California in April 2011, alleged that he discovered a series of in-app purchases charged by his then 8-year-old daughter after he allowed her to download some free apps between January and March 2011 according to court records . In his complaint, he asserted that he was unaware that the games Zombie Café , Treasure Story , and City Story  had in-app purchase options. Four other plaintiffs made similar allegations in a consolidated case before the U.S. District Court for the Northern District of California, San Jose division.
The FTC complaint notes that Apple received at least tens of thousands of complaints about unauthorized in-app purchases by children . One consumer reported that her daughter had spent $2,600 in the app Tap Pet Hotel , and other consumers reported unauthorized purchases by children totaling more than $500 in the apps Dragon Story  and Tiny Zoo Friends . According to the FTC complaint, consumers reported millions of dollars in unauthorized charges to Apple.
How do you buy apps? Apps are available through centralized online marketplaces. Any person or organization can write an app, but distributing the app beyond a small group of acquaintances usually requires it to be in a marketplace. Even free apps that have no internal purchase options are available through a marketplace. Apple's marketplace (called the “App Store”) digitally distributes apps to iPhones and iPads . Similarly, Google distributes apps for Andriod devices through its online marketplace named Google Play . All payments go through the marketplace host (e.g., Apple or Google) and the host then proportions payments to the requisite app developers. Marketplace hosts dictate the terms of app distribution, possible app revenue models and available payment options. Here is how payment works at Apple's App Store. Each iPhone and iPad must associate with an account at the App Store. A consumer establishes an App Store account with an email address and a password the consumer creates. To purchase apps, the account must also have either a credit card number recorded or a balance acquired through purchasing prepaid cards. When a consumer selects an app to download, even a free app, or makes a purchase while using an app, the consumer authorizes the purchase using his password, which may be required at the time of purchase or may have been given up to 15 minutes earlier. The App Store then bills the associated credit card or reduces the balance in the account and sends a receipt to the consumer's email address.
In-app purchases tend to raise issues in other countries too. According to news accounts, last year in the United Kingdom, five-year-old Danny Kitchen wanted to play the free app, Zombies vs Ninja , so his dad provided the password for the download. Danny then went on to make a $109.99 (£69.99) in-app purchase 19 times within the next ten minutes, as the password did not need to be entered again. The total bill was $2,535 (£1,710) .
A month after the story aired, the UK's Office for Fair Trading (OFT) launched a lengthy investigation to examine how mobile game companies use in-app purchases and personal data of players . The OFT announcement, citing a 2012 online gaming survey, reported that nearly 90 percent of children in the UK between the ages of 7 and 15 played online games in the prior six months, and half of those spent money to keep playing at least once . The OFT announcement also cited that on April 9, 2013, 80 of the 100 top-grossing Android apps were free to install and raised revenue through in-app purchases .
A couple of weeks after the FTC announced its settlement with Apple, the OFT published its final principles for app games [29,30,31]. Below are some highlights. Companies have until April 1 to make sure their games comply.
- Costs associated with a game must be provided up-front before download.
- Apps should not include practices that are aggressive or exploit a child’s inherent inexperience, vulnerability or credulity or to place undue influence or pressure on a child to make a purchase.
- The consumer must give express, informed consent for each purchase. Consent cannot be assumed.
The FTC settlement requires Apple to modify its billing practices no later than March 31. Apple must obtain your express, informed consent prior to billing you for any in-app charges, and if the company gets your consent for future charges, you must have the option to withdraw your consent at any time. These requirements cover all in-app purchases, not just children's apps.
Below are three approaches to ignite discussion on possible design decisions mobile phone manufacturers (not just Apple) might make. The first adds text to the pop-up password window. The second changes the default settings. The third approach introduces the notion of having different profiles of settings for different uses. Together, these three approaches give you some initial thoughts for brainstorming.
Approach #1 Notice
When a purchase is made, a pop-up window appears that displays the email address associated with the account and asks for the accompanying password. This window could show an additional line of text that states the scope of subsequent password-free purchases (e.g. “Active for 15 minutes”) and provide a link or other way for consumers to adjust the setting. An advantage of this approach is that it seems easy to implement.
Approach #2 Options and Defaults
Version 6.1 of Apple's operating system (iOS) has about 60 choices to configure the overall iPhone or iPad device and at least 4 additional choices for each downloaded app. For example, there is a switch to select whether to require a password at each purchase or to provide a 15-minute window during additional purchases will not require the password. Another switch disables in-app purchases altogether. Each downloaded app has a configuration switch to disable it. From the discussion above, initial configurations of iPhones and iPads shipped from Apple have in-app purchases enabled and passwords having a 15-minute grace window. If the default changed to require a password per purchase, would that be sufficient? If so, Apple would only need to change the initial setting of one switch. An advantage of this approach is that it is simple to implement.
Approach #3 Profiles
Imagine being able to store different configurations of settings as selectable profiles. One profile would be for my son and others for me. Selecting one of the profiles immediately sets all the requisite options. In my son's profile, for example, I would disable apps like email that he is not to use, require a password for each purchase, and disable other features like location tracking. For shopping, I might have a profile that turns Wi-Fi and Bluetooth off or on (see my prior post about mobile location analytics). My “flying” profile would select airplane mode but with Wi-Fi available for use on the plane.
The idea of using profiles with mobile phones is not new. Ann Cavoukian is the Privacy Commissioner of Ontario, Canada. She and Marilyn Prosch issued an advisory report in 2010 aimed at engineering privacy into mobile technologies . They reportedly convened an expert panel of top executives from a number of facets of the mobile communications industry, representing device manufacturers, service providers, and major technology-consulting firms. Even though the panel's recommendations are about privacy and not usability, one of the recommendations is that device manufacturers should allow users to differentiate between different types of users, or between various roles of single users. They even provide a parent-child example.
In comparison, the first two approaches, adding a line of text to the password window or changing the default setting to require a password, are easy to implement but narrowly specific to the issued raised in the FTC complaint. The third approach may be more generally useful to users because it provides an easy way to change more than one setting simultaneously for all kinds of uses, but is it sufficient? Is a combination best?
What You Can Do
This inquiring mind wants to know what you think. Perhaps you have your own design or a comment to make below.
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2. Complaint in the Matter of Apple Inc. U.S. Federal Trade Commission. FTC File No. 1123018 http://www.ftc.gov/sites/default/files/documents/cases/140115applecmpt.pdf
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19. TeamLava Launches City-Building App, City Story, on the iPhone. Press Announcement. http://www.insidesocialgames.com/2010/08/18/teamlava-city-story-iphone-ipad/
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22. Tiny Zoo Friends. TinyCo, Inc. https://itunes.apple.com/us/app/tiny-zoo-friends/id456082760?mt=8
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29. Online games industry given two months to get house in order following OFT investigation. Press Announcement. United Kingdom Office of Fair Trading. January 30, 2014. http://www.oft.gov.uk/news-and-updates/press/2014/05-14
30. The OFT’s Principles for online and app-based games. United Kingdom Office of Fair Trading. OFT1519. http://www.oft.gov.uk/shared_oft/consumer-enforcement/oft1519.pdf
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32. Cavoukian A and Prosch M. The Roadmap for Privacy by Design in Mobile Communications: A Practical Tool for Developers, Service Providers, and Users. December 2010. (Also appears in Future Challenges in Security and Privacy for Academia and Industry. 26th IFIP TC 11 International Information Security Conference. SEC 2011. Lucerne, Switzerland.) http://www.privacybydesign.ca/index.php/paper/the-roadmap-for-privacy-by-design-in-mobile-communications-a-practical-tool-for-developers-service-providers-and-users/