Why are in-the-ear hearing aids skin colored? It makes them look like a phone from 20 years ago.

Ideally, it was to make them "appear" invisible.  But to me they look like a wad of chewing gum inside the ear!  I have fit patients with in the ear devices in a darker color than their skin and it actually looks more invisible that way. I agree that a behind the ear, even when a custom mold has to be added, is more discreet than an in the ear device.

Ask your provider for something darker than your actual skin tone if you HAVE to have an in the ear aid!

If you look at the inside of the aid (if the shell is clear) you can see all the wiring & components. 

If the faceplate were also to be transparent it would probably look quite unsightly.

I often have patients choose a different shell colour ie white for the right for easy identification but if a mini canal device with twin mics is fitted it can cover a wide range of losses & is very discrete, although I would say CRT aids still account for the vast majority of the devices ordered​ from my organisation. The receiver wires can be matched to nine different skin tones with Vanish for receiver wires/thin tubes so with a very compact aid like a Unitron Moxi Now well matched to a hair colour this can be more discrete than most in the ear options.

I hope this helps.

The original intent of a "skin colored" in-the-ear hearing aid was to make them as "invisible" as possible.  However, they ended up being even more obvious.  Many hearing aid companies have done a better job of allowing for other color options to more closely match the users skin tone.  Even better, the Invisible-In-the-Canal (IIC) hearing aids have a black face plate that lets the hearing aid hide inside the dark shadow of the ear canal.  I believe eventually hearing aid users will opt to have more "tech" colors such as gunmetal, black, or titanium as stigma surrounding hearing aid use continues to decline.  In the interim, most users have switched to the behind the ear styles of hearing aids due to their more discrete nature compared to skin colored ITEs.

Skin colored custom aids are to camouflage the unit as best possible.  Today's technology allows for much smaller custom aids where visibility is far more limited. The smallest "Invisible in the Ear" aids usually have a darker faceplate to resemble a shadow in the ear canal.  As a convenience for my patients, I usually make the faceplate dark and the shell in red and blue for right and left aids. Identification for the patient is much easier when color coded ... and the shell portion is not seen when worn.     

Whether right or wrong, the belief is that by making them skin colored they will be less noticeable to someone casually glancing at the wearer.  Usually you can order the devices in a few different shades to match your skin tone, ranging from black, to dark brown, to light brown, to beige or pink.  Additionally, when the shells are manufactured, they are typically 3D printed on a platter with several (up to 100) shells at one time that all must be made the same color.  So while technically possible to pick whatever color you want, it is highly inefficient for the manufacturers to 3D print a single unit in lime green or hot pink and to manufacture a single face plate with battery door in that color to match.