Devices with saved credit card info dangerous in kids' hands

By Benjamin Salisbury

Mobile devices have made it easier for adults to make purchases without the hassle of getting out a card. But no matter how often you remind your kids to get their noses out of their phones, have you considered that technology has made it easier for them to spend, too?

Credit cards connected to phones, tablets and gaming consoles make it simple for your kids to run up a bill, whether they realize it or not. And if it happens to you, you may just have to chalk it up as an expensive lesson learned.

According to Halifax' 2015 annual pocket money survey, half of parents surveyed said their children are not allowed to spend money on digital downloads. However, 84% of children admit to doing so.

Case in point: in 2013, the Daily Mail reported a story on Doug Crossan, who discovered his 13-year-old son accidentally spent £3,700 on in-app purchases via various iPad games. In Crossan's case, Apple refused a refund, citing parental responsibility and saying iPads have password locks to prevent unauthorised purchases.in-app-purchase

Consumer groups such as Which? have criticised companies such as Apple, Google, Amazon and Facebook because in-game purchases to access new parts of a game are aimed at children who may not realise that when they click on the option to buy something, they are spending actual money, not virtual money. Calls to Apple and Google from Uk.CreditCards.Com for comment were not returned.

Hard to determine whether purchases were authorised or not
The difficulty in assessing such claims is deciding whether the controls on games or social media sites are adequate or if parents should be responsible for how their credit card is used.

For example, parents often allow their children to use their credit cards to purchase a game - but only for the initial purchase, not for subsequent purchases. But handing over your card details just once makes it difficult to prevent future unauthorised purchases.

Fortunately, a plethora of well-documented cases has led to many firms changing their billing practices to make it more difficult for children to make these purchases, and the EU is investigating the problem as well.

In 2014, Apple Inc. agreed to refund a minimum of $32.5 million and change its billing procedure to settle a US Federal Trade Commission (FTC) complaint that the company billed for millions of dollars of charges incurred by kids' mobile apps without parental consent. Though the company has not agreed on recourse for UK and European consumers hit by the same problem, it has made regular changes to its system on the App Store. For instance, apps have a purchase button that lists the price; in the case of free apps, the button used to say "free" instead of listing a price. Now, the button for free apps is labelled "get" rather than "free," a change of wording that signifies you can install the app at no cost, but it may not be entirely free forever in cases where there are in-app purchase options.

Additionally, Apple improved its iOS7 software by adding a kids' category to its App Store, which has apps rated for kids between ages 0 and 11, split into under 5's, 6-8 and 9-11. On the iOS8 version, the company introduced Family Sharing with "Ask to Buy," which takes the place of the purchase button (the one that normally lists the app's price or "get"). Parents can enable the Ask to Buy feature for certain accounts, i.e., their children's, so that the primary accountholder gets final approval on all purchases. With Ask to Buy, even if a credit card is automatically linked to the iTunes account, the child does not have the option to buy an app, even a "free" one, without adult permission.

Other examples include Google, which changed its "top free apps" label on Google Play to "top apps", and Microsoft, which requires a parental passkey for all Xbox purchases.

What precautions can you take?
Ultimately, the FTC action and EU want all companies that have an app store to make their costs clearer. The EC wants to discourage companies from misleading consumers about the real cost of in-app purchases and does not want them to be marketed directly at children or to encourage parents to pay for extras. Until companies can find a way to do that, however, there are some steps you can take to prevent unwanted charges.

First and most important, choose a hard-to-guess password and change it regularly. Children are often more knowledgeable about technology than their parents, so even letting them watch you enter a PIN or password could allow them to figure it out -- they can see whether you're swiping a pattern, tapping in a 4-digit PIN or typing in a longer password.

Secondly, supervise your children when they are on any device. Keep up with what games they are playing and, if necessary, search online to see whether those games allow in-app purchases. Aside from keeping your credit card safe, knowing what your kids are up to online is always a good idea to keep identities safe and inappropriate content at bay.

Then, put as many stops in place as possible. With an Android device, you can set up your Google Play account so all purchases require a PIN. With an Apple system, you can either require all purchases to have a PIN verification or turn off in-app purchases completely. With Windows phones, you can set up a "kid's corner", which gives children their own area within your handset that restricts access to certain apps, websites and services. Microsoft's Xbox One has a system in which one Gold Membership allows anyone to use the console, but only the membership holder can use the credit card.

Finally, you can remove your credit card from the device altogether and use gift cards. Most retailers sell gift cards for the most common devices -- you'll be able to rest easy knowing your children have a certain amount of money to spend and when they've used it up, that's it.

See related: Catching and preventing familial fraud

Published: 29 September 2015