There should be no 'oops' when an in-app purchase is made

Shane Schick

Perhaps this could explain why Apple (NASDAQ:AAPL) sometimes takes so long to approve new offerings for the app store: It is too busy dealing with customers who complain about all the in-app purchases they insist they didn't make.Earlier this week The Register reported that Australia's Commonwealth Consumer Advisory Council will be conducting an inquiry into how citizens are using apps, and in particular to point out which developers are fooling consumers into buying things.

"This inquiry will help to name and shame some of the worst offenders," the CCAAC said. "Some consumers have raised concerns about aspects of mobile commerce, particularly where purchases can be made without much difficulty using stored credit card data."

This may sound ridiculous to Americans, but it's not. There's already at least one case where a group of parents who are suing Apple over allegedly accidental in-app purchases made by their children. This is likely one of the reasons why last year Apple updated its OS so that passwords had to be re-entered a second time before a purchase could be made, and put a 15-minute limit on purchases that could be made after that. There are more and more posts popping up online to try and educate consumers about how to prevent in-app purchases by mistake. Australia is just taking the natural next step: making an example of the developer community for failing to be more proactive about the way they conduct their business.

Much like the U.S. government's probe into the privacy measures in mobile apps (or lack thereof), being responsible about the way in-app purchases are offered to consumers will likely become a lightning rod issue that creates an unhealthy witch-hunt mentality among law enforcement agencies vs. developers who are, in many cases, more guilty of laziness than anything else. If you can build in-app purchases into a game or service, it's not that hard to put in messaging and other safeguards that would prevent kids (and in some cases adults) from unknowingly racking up an expensive tab on their credit cards.

Of course, for developers in-app advertising is a monetization strategy, and there is an obvious incentive for them to make the process as simple--and as fast--as possible. Striking the right balance between offering convenience and ensuring only intentional purchases are made may not be easy, but it should be considered as less of chore and more of a core component to monetization. As the old adage goes, it is much easier in theory to keep an existing customer and grow your business with them than to gain a new customer. That's true of any business, but it seems especially true in this one. If you look at the overall mass of smartphone users, the majority of them haven't made in-app purchases. There is only a certain proportion of them--as yet impossible to quantify exactly--who will do so. The only thing we know for sure is that one bad experience will almost certainly discourage them from making an in-app purchase a second time.

Try this approach: Imagine an inquiry similar to the one about to begin in Australia is already happening in the United States. You've been asked to document your approach to in-app purchases; not only how you allow it to happen in your app, but how you work with the app stores or directly with consumers to remediate any mistakes. How prepared are you to do that? For many developers, it will seem like a make-work exercise that takes them away from creating an app, marketing it and gaining an audience. Like any entrepreneur, such an investment takes time, and time is money. As governments will eventually make them realize, however, in this case it is both time and money well spent.--Shane