With 2 in 3 children aged between 11 and 16 owning smartphones, children are a substantial (and growing) market which obviously presents significant opportunities for app developers using PRS. The steep rise in complaints, however, shows that the opportunity is, in some circumstances, open to exploitation. PhonepayPlus has identified the following main areas where such exploitation of PRS or other micro-payments occur in apps or on social networks.
• Risks arise through social media, where children’s trust in their social networks can make them vulnerable to unscrupulous and misleading promotions.
• Risk of children being confused by less transparent pricing models, such as virtual currencies, in-app billing and hidden subscription services.
• Risk of children being targeted by malware (malicious coding on apps that can charge an account or access an individual's data without their consent).
App developers should be aware that PhonepayPlus investigates complaints and has the authority to issue fines if there has been a breach of its Code of Practice. PhonepayPlus fined Amazecell Limited £300,000 for employing promotions that misled social networkers into participating in premium rate competitions. Children between 12-14 years old were tricked into ‘sharing’ and ‘liking’ a promotion for supermarket vouchers on Facebook, virally spreading the promotion, thus benefitting from the trust social networkers place in their own social networks.
Whilst being a warning shot for app developers looking to use PRS in their mobile or social network apps that the regulator is aware of the issue and shall be enforcing the Code of Practice, the report also calls on parents to address the issue up front and educate their children accordingly.