Here's how I'll roll:
1) Whip/smack them with belt/bamboo on their legs/hands (optional, some new age parents are getting too tame nowadays)
2) Sell their 360, from the article it's clear she cancel their subscription.
3) Make them pay back the debt, either by cutting their monthly allowance or wait until they older enough to get a job to repay the debt.
4) If I feel generous, I'll give them a Game Boy Advance.
Also for the mother:
1) Fix your damn laptop! you said it broke for 6 months, fix it already!
2) Teach him about money, kids nowadays spend money like pouring a whole bucket of money down the drain.
For the kid:
Listen kid, you got off easy, older generation will give you a five across the face, much much older generation will give you a sandwich, knuckle sandwich that is.
Now how to avoid this
this words:
"Now son/daughter, here's my CC in your gaming console(s), everytime you want to buy something, ask me first then I'll decide to allow it or not, if you rake a mountain of bills, you'll say bye bye to your 360/PS3/Wii and say hello to my old Game Boy Advance, Capiche?"