MONEY Shopping

Why Dollar General and Dollar Tree Both Want to Buy Family Dollar

An unusual kind of price war is rocking the world of dollar stores, with two suitors seeking to buy out the same competitor. As you might imagine, a lot of dollars are involved in the competition—nearly $10 billion.

Three weeks ago, when Dollar Tree bid to buy Family Dollar for $8.5 billion, it seemed like more or less a done deal. On Monday, however, the biggest player in dollar stores, Dollar General, offered its own bid for Family Dollar, reportedly in the neighborhood of $9.7 billion. One way or another, it looks like one giant dollar store company will emerge after one of these bids is accepted.

But why are these companies involved in this unusual breed of “price war”? And what does it say about the low end of retail that either of these colossal mergers would make sense?

The dollar store has been one of the great success stories of the recession era, with chains such as Dollar Tree, Family Dollar, and Dollar General posting record sales figures, broad expansions, and soaring stock prices over the past half-dozen or so years. Ironically, though, the merger may be a sign that the era of rampant dollar store growth is plateauing, even while many household finances remain pinched and dollar store shopping continues to be popular.

Here’s a look back at the recent evolution of the dollar store, with a particular focus on why many shoppers have come to view them as handy neighborhood general stores—and not just for cheap stuff.

The Great Recession destroyed shopper budgets. In the late ’00s, the housing bubble burst, the stock market crashed, and the jobs market took an ugly turn. All of the factors combined meant that the free-spending habits developed by consumers in the preceding years would have to be broken and replaced by new strategies to live cheaply. The much-heralded demise of conspicuous consumption spelled trouble for products like GM’s Hummer, but it also meant boom times for low-price retailers—dollar stores especially.

With little money to spend, especially if they’d cut up their credit cards as many had in a move to a cash-only existence, consumers stretched what few dollars they had at dollar stores. Consequently, dollar stores flourished. Dollar General doubled its store locations in the first decade of the millennium, for instance. According to one study, by 2011 there were more dollar stores than drugstores in the U.S.

Dollar stores pushed one-stop shopping. Shrinking American household budgets helped the rise of dollar stores. So did the broad campaign by dollar stores to push beyond the idea that they were good only for junky throwaway trinkets, off-brand canned goods, and anything else that had grown stale on the shelves of mainstream stores.

Among the goods shoppers started seeing more of at dollar stores are groceries, home decorating items, and even beer and wine. In some cases, dollar store offerings have been celebrated as surprisingly chic: A New York Times columnist wrote about his adventures decorating his apartment with dollar store purchases, while the 99-Cent Chef developed a following based on recipes that use ingredients purchased only at 99¢ Only stores. According to one survey from 2010, 18% of shoppers said that they were buying food and drinks for holiday parties at dollar stores.

Chances are, they were also buying wrapping paper and some stocking stuffers at dollar stores too. And that’s the point. When a shopper can buy fresh bread, produce, a gallon of milk, birthday cards, laundry detergent, shampoo, Christmas presents, and maybe a few bottles of cheap Chardonnay at the dollar store, there’s less need to hit the supermarket, liquor store, drugstore, or big box retailer. Dollar stores have been actively promoting themselves as one-stop shopping options with almost anything you need to buy—and with more locations and a smaller, easier, more manageable layout than, say, the nearest Walmart.

They’re not as cheap as you think. While there are undoubtedly some great bargains at dollar stores, shopping experts also advise against the purchasing of certain items there. Like, say, electronics and pots and pans. If you’re surprised that dollar stores even have such items, bear in mind that oftentimes, not everything in a dollar store is priced at $1. Dollar Tree has stuck to $1 pricing for everything in its stores, but Family Dollar and Dollar General don’t bother abiding by the $1 price rule. Among other items, the Dollar General website lists a Craig Android tablet for $78 more than $1.

Dollar stores employ the age-old strategy of drawing shoppers in with bargains and hoping that they grab some other (non-bargain) goods while they’re at it. A Family Dollar spokesperson told the New York Times columnist mentioned above that low-priced cleaning supplies were “almost like the gateway product” for dollar store shoppers. “It starts with cleaning goods,” he said, “and ends up with a bedspread.”

Or perhaps a tablet, or a bottle of wine—which will also cost more than a buck ($2.99 and up, usually, when available.) Shopping centers have been embracing dollar stores in their slight turn upscale because they’re able to attract slightly better-off clientele. But budget-conscious consumers must be careful: In many cases, dollar stores charger higher prices per unit than what’s to be found at Walmart, Target, or a warehouse club such as Costco. It’s just that dollar stores seem like bargains because the items are low quality or they come in exceptionally small sizes. A few weeks ago, a controversy was stirred up when Dollar General offered a special on diapers in “all counts and sizes” that Walmart and Target failed to match, even though they have price matching policies. Why? Because Walmart and Target offer diapers in far bigger sizes than what’s available at dollar stores.

Speaking of Walmart and Target, they’ve slowly been rolling out a counteroffensive to dollar stores by way of smaller retail locations, often in the densely populated urban hubs where dollar stores are ubiquitous. Supermarkets have entered the battle too, with stores that are half the size of the usual grocery shop. The smaller size means these stores can easily fit in a strip mall or city block, making them a lot more convenient and practical for millions of shoppers.

So now we have a situation in which dollar stores do what Walmart and Target do best by stocking groceries, electronics, and a little bit of everything, and Walmart, Target, and grocery chains do what dollar stores do best by offering small, convenient locations (and more of them) and many bargain-priced goods. The retail lines are blurring. Every player wants to be the convenient, one-stop shopping destination for shoppers, and it has gotten much tougher for a dollar store or any retailer to stand out. When it’s hard to differentiate yourself in the marketplace, and it’s hard to grow, it’s probably time to combine with someone in the same boat to help you compete.

That’s what seems to be why both Dollar Tree and Dollar General want to buy Family Dollar. In today’s ultra-competitive marketplace, a merger represents their best chance to grow, or at least survive.

MONEY Shopping

$10 Jeans, and America’s Fading Love Affair with Denim

REBEL WITHOUT A CAUSE, James Dean, 1955
The 1950s: James Dean made denim iconic in "Rebel Without a Cause." Courtesy Everett Collection

Right now is a terrific time to buy jeans—partly because jeans haven't exactly been hot sellers lately.

CNBC recently cited data from the NPD Group indicating that jeans sales are down 6% year over year. What’s more, last fall, the NPD Group also reported that sales of higher-end jeans had dipped significantly, including a 40% decline on the West Coast for jeans priced at $75 and up.

The numbers may not seem like that big of a deal. But given that the average consumer has seven or eight pairs of jeans—and 25% of women own 10 or more —any drop in the sales of such a traditional, iconic fashion staple is a pretty big deal.

On top of the fact that most American closets are already clogged with jeans, another factor is the emergence of yoga pants, leggings, and “athleisure” wear as the day-in, day-out go-to choice for more consumers. “Athletic and activewear are certainly the new everyday wear and that’s happening no matter what age people are,” one analyst told CNBC.

Because consumers don’t feel compelled to buy the obligatory pair of jeans (or three) during retailers’ all-important back-to-school season, stores have been rolling out extra-large discounts to entice shoppers into squeezing a little more denim into the family budget (and closet). Target is currently offering 40% off jeans for the whole family. All jeans at American Eagle Outfitters are under $30. Rollback prices at Walmart mean some Levi’s jeans are now under $13. Hollister jeans are on sale starting at $19, while skinny jeans at H&M are down to $10, and Old Navy has gone as low as $8 for kids’ jeans during this back-to-school season.

None of this means that iconic American jeans—worn by celebrities for decades, celebrated in books like Alice Harris’s The Blue Jean—will be disappearing anytime soon. But much like what happens to the color and texture of denim over time, the ubiquity and everydayness of jeans seems to be fading. The shift isn’t merely about trends and changing tastes either: The cost of jeans, and how denim prices compare to other options, is certainly a factor.

It’s hard to say exactly when America reached Peak Denim, but it was probably not long ago, around the time that “premium denim” jeans were given list prices of $300 (and even $1,000) to see if anyone would bite, and when infomercials for Pajama Jeans were all over TV. We’ve since moved on to a period when jeans, or at least “jorts” (jean shorts) are widely mocked by the likes of Esquire and Buzzfeed.

The yoga pants craze may have been kicked off by a company (Lululemon) charging $90, but nowadays shoppers are more likely to turn to comfortable leggings. “I can wear leggings from yoga to going out at night,” one shopper explained to the New York Post. “Most people go for leggings because it’s easier and cheaper” than a pair of jeans, the manager of an American Apparel store in Manhattan explained. “Denim is just denim,” she said. “The leggings are more versatile.”

While leggings cost as little as $10, the average price paid for a pair of jeans has been measured at $34 and $39 in various studies. When you add in that the typical consumer already owns more than a half-dozen pairs, it’s no wonder that shoppers are increasingly choosing cheap, flexible leggings over yet another pair of denim bottoms. It’s also no wonder that stores are feeling forced to drop jeans prices to make them more appealing.

For a look at denim through the decades, check out the gallery below.

MONEY Health Care

WATCH: Walmart Wants to Be Your Doctor

Walmart is testing in-store health clinics in select parts of Texas and South Carolina.

MONEY Shopping

OpenTable’s New Service Lets Diners Pay Without Having to Interact With Other Humans

The company's new mobile payments app means no more waiting for a server to give you a check.

Reservations app OpenTable already lets users book a table at 31,000 restaurants nationwide without having to go through the trouble of talking to another person. Now, the company is taking this service to its next logical level by letting diners pay for their food without any tedious human interaction.

As of Monday, the app will allow customers in New York City who made OpenTable reservations at one of 45 participating eateries to pay for the meal with their smartphone. The service will become available in 20 more cities by the end of the year. That means the age of waiting for a waiter to bring you a check may be coming to an end.

Sarcasm aside, this is a logical next step for OpenTable, and restaurants in general. The fact that we’re still stuck using pen and paper to pay for a meal in 2014 is a little strange considering that most people are carrying around internet-connected devices wherever they go.

There’s currently no fee for the service. According to Bloomberg, OpenTable hopes to make money by attracting more people to download its app. The company gets paid by participating restaurants for every reservation it schedules. But the Wall Street Journal ominously reports that while OpenTable CEO Matt Roberts isn’t currently making a profit from mobile payments, “he hopes to eventually.” So enjoy the free service while it lasts.

OpenTable isn’t exactly the first company to come up with the idea of dinner-centric mobile payments. In addition to Seamless and GrubHub, two companies that let users order take-out and delivery meals over the internet, there’s a whole industry emerging around letting diners pick up the tab on their phone. The Journal notes that startups like Cover, Dash, and TabbedOut, in addition to giants like PayPal, have all created similar apps.

That might make the market seem saturated, but in reality most restaurants don’t work with any of these products, meaning the market is wide open for anyone who gets it right. OpenTable probably has the best chance, given the size of its pre-existing network, although Paypal is aggressively growing its network internationally.

No matter who wins, the question remains: Which minor inconvenience will technology solve next? Maybe an app that lets you order pizza with a single button? Oh wait, that already exists

MONEY Leisure

Shark Week Turns into a Feeding Frenzy for Consumer Eyeballs—and Cash

140801_EM_SharkWeek_Cupcakes
No "Shark Week" party is complete without a dozen of these cupcakes ($34.95 via Discover Channel store). courtesy of Georgetown Cupcakes

When there are shark-themed donuts and cupcakes for sale, it becomes clear that the marketing of "Shark Week" and sharks in general has, well, jumped the shark.

The Discovery Channel’s “Shark Week” kicks off on Sunday, August 10, bringing the frenzy of interest in the fascinating creatures of the deep to all new heights. The annual event is a ratings bonanza, and a hot topic on social media, complete with its own prerequisite hashtag #sharkweek.

While there’s nothing stopping “Shark Week” from being fun, entertaining, and informative all at once, some experts in the field—of scientific research, not entertainment or marketing—feel like the circus surrounding sharks is overkill, perhaps even exploitive. “I’m kind of disappointed, and I think most researchers are, too,” George Burgess, director of the Florida Program for Shark Research, told USA Today. “It obviously is a big draw, but I’m afraid that the programs have gone more to entertainment and less to documentary over the years. It’s kind of a shame, because they have the opportunity to teach good stuff in what’s going on with science.”

The Discovery Channel is hardly the only party that’s guilty of playing to the lowest common denominator by focusing on “blood and gore or animals performing tricks,” as Burgess put it. And it’s hardly the only player out there trying to hook consumers’ attention (and dollars) by way of the shark.

Sharks—or more precisely, the fear of sharks—have a long history of helping to sell stuff. Movie tickets, for instance. Steven Spielberg’s “Jaws” not only kicked off the summer blockbuster as a phenomenon, but is also widely considered the biggest and best summer blockbuster film of all time. A series of sequels and other shark movies followed, as did the ever-expanding, factually questionable “Shark Week” on the Discovery Channel. In the so-called “Summer of the Shark,” in 2001 (mere weeks before 9/11, it’s often noted, when very different fears took over the American consciousness), unwarranted hype over shark attacks was used to sell magazines and keep viewers glued to 24/7 news channels, awaiting word of the next deadly aquatic encounter.

We’re still fascinated by sharks, and sharks are still being used to lure us into shops and TV shows and movies that we should probably know better than to watch. Lately, in an age dominated by memes and ironic-air-quotes “entertainment,” the cold-blooded mankiller of the deep has been replaced by an equally fictitious creature—the shark as adorable mascot.

This summer, “Shark Week” has been joined by the straight-to-cable arrival of the gag “movie” “Sharknado 2.” But given how much over-the-top goofball hype goes into “Shark Week” itself—Rob Lowe waterskiing atop two great whites anyone?—the Discovery Channel event seems to be its own best parody.

The merchandising of sharks and “Shark Week” has been, in a word, shark-tastic (the title of a book sold on the Discovery Channel, naturally). Among the roughly 150 items listed on the site as appropriate purchases for “Shark Week” celebration are shark kites, a Shark Week smartphone case, Shark Week bottle openers and coozies, “clever” shark T-shirts that say “Bite Me” and “I’m Hammered,” and Shark Week cupcakes that show Rob Lowe atop his pal sharks again.

Elsewhere in the ocean of summertime shark products, Dunkin’ Donuts is selling a Shark Bite Donut (the frosting resembles a life preserver), and Cold Stone Creamery has shark-themed cupcakes and ice cream sundaes, complete with colorful gummy sharks. Limited-edition “Shark Week”-inspired soap is available at one New York City boutique, while a “Shark Week” search at etsy turns up more than 1,300 hand puppets, pencil holders, custom-designed panties, pieces of jewelry, and other crafts. A whole other list of goods has been devoted to the frenzy around “Sharknado,” including a new perfume called “Shark by Tara,” created by one of the movie’s stars, Tara Reid.

The normally sober tacticians at Consumer Reports even got in on the action, using the Sharknado sequel as an excuse to run a review of chainsaws—the perfect weapon in the battle against sharks falling out of the sky.

Then there’s shark tourism. It might seem odd that any beach community would actively want to associate itself with sharks. Yet the effort to brand Chatham, Mass., the town on the elbow of Cape Cod—near plenty of seals and therefore sharks too—as something along the lines of the Shark Capital of America has been several years in the making. Starting in 2009, news spread that biologists were tagging great white sharks off the coast. Sure, it freaked some swimmers and boaters out, but it also drew the masses to the coast, bearing binoculars with the hope of spotting one of the beasts.

“The great white shark is sexy,” Lisa Franz, Chatham’s chamber of commerce chief, explained to the Boston Globe last summer. “Chatham as a town, I think, has embraced the whole shark concept,” she said. “As long as nobody gets hurt.”

Fast-forward a year, and the shark schlock business is booming. “Truthfully, we’ve probably grown about 500 percent in terms of the sale of our shark apparel,’’ one Chatham tourist shop owner offering “T-shirts, hoodies, hats, belts, dog collars and other accessories” featuring great whites for $10 to $45 told the Associated Press in June.

People seem to love the shark meme so much that local restaurants and shopkeepers understandably have a new fear: They’re scared about what would happen to business if the sharks suddenly went away.

MONEY online shopping

Why Retailers Actually Want You to Unsubscribe From Their Spammy Email Lists

Wooden "SPAM" stamp
Bill Truslow—Getty Images

Gmail made it easier than ever to unsubscribe from unwanted email lists sent by retailers that somehow got hold of your email address. So go on, unsubscribe. Marketers won't mind (much).

This week, a message posted by Google + explained that a change at Gmail makes it quicker and easier to unsubscribe from unwanted email lists. “Sometimes you end up subscribed to lists that are no longer relevant to you, and combing through an entire message looking for a way to unsubscribe is no fun,” the note stated. To simplify things and save users time, Gmail is now automatically putting an “Unsubscribe” button at the top of the email, just to the right of the sender’s email address. Click it and those annoying emails you’re tired of deleting will soon go away (in theory at least).

Google made the case that the “unsubscribe option easy to find is a win for everyone. For email senders, their mail is less likely to be marked as spam and for you, you can now say goodbye to sifting through an entire message for that one pesky link.”

Not everyone is viewing the change in quite the same win-win light, however. Adweek described the Unsubscribe button as potentially “a huge blow to email marketers” because making it easier for people to unsubscribe will naturally result in more people unsubscribing. That means fewer people getting the messages of retailers, activist groups, and others that are constantly seeking ways to bolster their ranks of email list subscribers.

So this is awful for the retailers that rely on such lists to spread the word about new products and deals and thereby boost sales, right? Well, not necessarily. One email marketing expert told InternetRetailer.com that there’s an upside to the change at Gmail. On the one hand, yes, putting the Unsubscribe option in a more prominent position will put the idea into the heads of more subscribers and cause subscriber numbers to shrink. But Chad White, lead research analyst at the email marketing firm ExactTarget, said that the people who will utilize the quick Unsubscribe option are problematic subscribers to begin with. They’re the consumers who are most likely to complain about the emails and/or the company, and they’re more apt to categorize the emails as spam. Reporting an email as spam to Gmail is worse for the sender than unsubscribing, as it damages the sender’s reputation in the eyes of email providers.

“While marketers don’t want people to unsubscribe, that may be a better option than them hitting delete without reading an e-mail or hitting the Spam button,” said White. “This is the least bad option because it doesn’t hurt the sender’s reputation.”

Gmail’s Unsubscribe option has actually been around, but flying under the radar, for a few months. It was only just this week that the company introduced and explained it in a big public way. The development follows the much more significant innovation at Gmail last summer, when the service introduced a system categorizing emails into separate boxes for one’s Social, Promotions, and Primary messages. Retailers and marketers worried (and still worry) that the system segregates Promotions into an easy-to-ignore folder.

Yet as with the Unsubscribe button, some think there is an upside to Gmail’s categorization system. When the Gmail categories were introduced, Forrester Research analyst Sucharita Mulpuru told us via email, “The segregation could actually be helpful because people can quickly scan in one place things that may/may not be relevant without having to hunt for personal emails in a sea of mixed clutter.” She also argued that the category system could help marketers reach a much more targeted audience, providing “a ‘destination’ for people that’s not unlike getting a pile of Sunday circulars.”

Now that it’s easier to unsubscribe, marketers can assume that the people who remain subscribed are more of a core group that find the messages relevant and appealing. In other words: They’re really great customers. “There are actually people who love marketing emails–that’s the reason they still stay subscribed to email lists in the first place,” said Mulpuru. “It’s very opt-in and self-selected.”

MONEY Food & Drink

Sorry, Dude, You’ve Been Drinking the Wrong Beer for Years

Beer tasting
Daniel Grill—Getty Images

A blind taste test reveals that if you're loyal to a beer brand because of the taste, you just might be fooling yourself.

A new study from the American Association of Wine Economists explores the world of beer rather than wine, and the findings indicate that you could be buying a favorite brand of brew for no good reason whatsoever. While the experiments conducted were limited, the results show that when labels are removed from beer bottles, drinkers can’t tell different brands apart—sometimes even when one of those brands is the taster’s go-to drink of choice.

In the paper, the researchers first point to a classic 1964 study, in which a few hundred volunteer beer testers (probably wasn’t too hard to find folks willing to participate) were sent five different kinds of popular lager brands, each with noticeable taste differences according to the experts. But people who rated their preferred beer brands higher when the labels were on bottles “showed virtually no preferences for certain beers over others” when the labels were removed during tastings:

In the blind tasting condition, no beer was judged by its regular drinkers to be significantly better than the other samples. In fact, regular drinkers of two of the five beers scored other beers significantly higher than the brand that they stated was their favorite.

The new study takes a different, simpler path to judging the quality of beer drinkers’ taste buds. Researchers didn’t even bother with ratings data. Instead, the experiments consisted of blind taste tests with three European lagers—Czechvar (Czech Republic), Heineken (Netherlands), and Stella Artois (Belgium)—in order simply to find out if beer drinkers could tell them apart. The experiments involved a series of “triangle tests,” in which drinkers were given a trio of beers to taste, two of which were the same beer. Tasters were asked to name the “singleton” of the bunch, and generally speaking, they could not do so with any reliable degree of accuracy:

In two of three tastings, participants are no better than random at telling the lagers apart, and in the third tasting, they are only marginally better than random.

What these results tell researchers, then, is that beer drinkers who stick with a certain brand label may be buying the beer for just that reason—the label. As opposed to the taste and quality, which are the reasons that consumers would probably give for why they are brand loyalists.

As the researchers put it in the new study, “marketing and packaging cues may be generating brand loyalty and experiential differences between brands.” In other words, we buy not for taste but because of the beer’s image and reputation that’s been developed via advertising, logos, and other marketing efforts. Similar conclusions have been reached in studies about wine; one, for instance, found that wine drinkers will pay more for bottles with hard-to-pronounce names—because apparently we assume that a fancy name is a sign of better quality. We also buy beer, wine, and a wide range of other products due to force of habit, of course.

Drinkers who are loyal to a particular beer brand may hate to hear this—heck, so are consumers who are loyal to almost any product brand—but the research indicates we are heavily influenced by factors other than those we really should care about, such as quality and superior taste.

All that said, we must point out the study’s shortcomings. The beer tastings were very limited in scope. It’s not like tasters were asked to compare Bud Light and a hoppy craft IPA, and then failed to tell the difference. And just because some volunteers couldn’t differentiate between beers doesn’t mean that you, with your superior palate, would be just as clueless. You may very well buy your favorite beer brand because, to quote an old beer ad, it “tastes great.”

Just to be sure, though, it might be time to take the labels off and do some blind taste testing. Could make for a fun Saturday night.

MONEY Shopping

WATCH: Best Apps for Your Lazy Days

If you’re feeling a bit sluggish and don’t feel like leaving the house to get food, clothes or anything else, there’s an app for that — actually there’s a lot.

MONEY Kim Kardashian

How to Keep the Kids From Giving the Kardashians Your Kash

Kim Kardashian
Dominique Charriau/WireImage—Getty

Kim Kardashian is in the news again, and (surprise!) not because she did something good for society. The reality show starlet recently released an iPhone game, Kim Kardashian: Hollywood, and now one parent is revolting after learning the app “tricked” her child into spending over $100 on in-app purchases in just two days.

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When Ayelet Waldman, the bestselling author of Bad Mother and wife of novelist Michael Chabon, checked her son’s iTunes account she found that he had spent $120 on the Kardashians’ product — even though she and her husband thought they had adjusted their account settings to prevent such purchases.

The game, which markets itself as free, incentivizes players to buy in-game currency (called “koins”) in order to advance in the story. The game allows users to spend anywhere from $4.99 to $99.99 in a single transaction depending on how many koins they want to buy, and these sales are reportedly making Kim $700,000 a day. It’s such a clear money-grab that Stephen Colbert spoofed the app on an episode of the Colbert Report.

Kim Kardashian Hollywood
Glu Games

Luckily for Waldman, Apple ended up refunding her child’s purchases (and he’s learned to hate the Kardashians, so that’s a plus), but parents can’t depend on companies coming to the rescue when young users are fooled into handing their parents’ money over to game makers. Here’s how to secure your device and avoid unexpected bills.

1. Turn off in-app purchases entirely. It’s the simplest and most effective way to stop micro-transaction hungry apps in their tracks. On Apple products, go to the settings app and tap “enable restrictions.” That will let you disable your kid’s ability to install apps, delete apps or make in-app purchases. On Kindle Fire, just go to settings for the Amazon Appstore and turn off “in-app purchasing.”

You can also get rid of in-app purchases and other online dangers by turning off the internet entirely. To do this on Apple products, go to settings and flip the airplane mode switch. On Fire, you can do the same thing in “Quick Settings” under “Wireless & Networks.” But remember, this won’t prevent your child from making purchases if you let them back online.

2. Set up a password for in-app purchases. Setting an in-app purchasing password will let your children still be able to use in-app purchases—but only with your approval. On Apple tech, it’s as easy as going back to the “enable restrictions” setting. On Kindle Fire, it’s not quite so simple. You can use the “Parental Controls” section of settings to set a password, but the FTC says that each new purchase creates a window of time (15 minutes to an hour) when anyone using the device can continue making in-app purchases.

3. Avoid “free” apps that aren’t so free. There’s no such thing as a free lunch, and at least on smartphones, there’s increasingly no such thing as a truly free game either. According to a FTC survey from 2012, about 84% of the apps that let kids make in-app purchases were advertised as “free.” These games often require purchases to make the game more fun or decrease the difficulty to more manageable levels. It’s often cheaper to pay a couple bucks up front for a good game than risk paying more over time with an ostensibly free product.

Did your kid run up a huge bill on a mobile device? How did they do it? Did you get a refund? Do you have any advice for other parents?

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