Raising Money-Smart Children
Games, Ads and In-App Purchases
How games and apps encourage children to spend through in-app purchases and loot boxes, and how parents can set limits and teach critical thinking.
Many games and apps are free to download but make money through in-app purchases. Children can easily spend real money, sometimes without realising.
How games encourage spending
- Virtual currencies: gems or coins bought with real money make it hard to see real costs.
- Loot boxes: random rewards bought with money or virtual currency, similar to gambling.
- Limited-time offers that create urgency.
- Social pressure: special items that friends have.
- Progress barriers: paying to skip waiting or unlock levels.
Loot boxes and gambling
Some countries have debated or restricted loot boxes. Belgium effectively banned paid loot boxes in 2018, treating them as gambling. Researchers have found links between loot box spending and problem gambling in some studies.
Advertising to children
Children are especially vulnerable to advertising because they may not recognise persuasive intent. In India, the Advertising Standards Council of India has guidelines on advertising to children, and influencer marketing aimed at children raises concerns.
Parental controls
- Require passwords or approval for purchases on app stores.
- Remove saved cards from children’s devices.
- Use spending limits.
- Check purchase histories regularly.
Teaching critical thinking
- Discuss how games make money and why they offer “free” things.
- Convert virtual currency to real rupees: “This pack costs 400 rupees - that’s two weeks of pocket money.”
- Agree on a budget for games, paid from pocket money.
- Talk about ads and influencers: who pays them and why.
When mistakes happen
If a child makes unauthorised purchases, contact the app store; refunds are sometimes possible. Use the event as a learning moment rather than just a punishment.
A parent finds 3,000 rupees of charges from a mobile game. Her son thought gems were just part of the game. They sit together, turn off saved payments and agree he can spend 100 rupees a month of his own pocket money on the game.
Many free games are designed to encourage spending through in-app purchases, virtual currencies and loot boxes.
- Free games often make money through in-app purchases and loot boxes.
- Virtual currencies hide real costs from children.
- Parental controls, password requirements and removing saved cards prevent surprises.
- Converting virtual currency to rupees builds critical thinking.
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