Financial Predators and your Children

Children face many dangers when surfing the internet. Most parental concerns center on the child's physical safety. Of course that is the number one concern, but parents should also take care to speak with their children about the financial dangers and pitfalls of being active online. Children are the target of two principal financial predators, those looking to take advantage of them as a market (i.e. sell them things) and those looking to enter the home through the child in order to gain access to the family's financial data. Financial predators target children on a daily basis, and your kids and your finances could be at risk.

Marketing to Kids
As anyone who has spent more than a minute surfing the internet knows, it is awash in "freeware," including games targeted to children. However, freeware often turns out to be not-so-free as the basic software provided no longer meets the cut. Additional software is quickly presented to kids, but of course upgrading involves a financial transaction.

Marketers know that tech savvy children will not have a difficult time finding their parent's credit card information (or their own, as more and more children are carrying plastic) or accessing an online payment service such as PayPal. Accounts of ridiculously high mobile phone bills are too numerous to count, but it's the exorbitant charges that make the news. The $5 charge often slips in under the radar, unless they add up, which they can quickly do. The "Mighty Eagle" from the popular game Angry Birds originally required a one-time fee to access; in the most recent release (Angry Birds Space), the Mighty Eagle now costs each time you use it. Granted the charge is not large, but the nickels and dimes do add up.

Ferreting out those charges is no easy task either. A $2 charge from XYZ Corp. normally slips right by most consumers' reviews of their credit card statements.

Increasing the "Nag Factor"
Children have always been a large target market group, and the internet makes them susceptible to even more advertising. In the past, large companies like General Mills and McDonalds were the most successful at getting your children hooked on their products. However, the internet makes advertising very inexpensive, opening it up to more start-up companies and even individuals who will try to get your kids to buy their products. This is great news for marketers working to raise what is called the "nag factor," in their advertising, also known as an ability to make kids want to buy something enough that they will ask their parents over and over for it. Not only do advertisers want to sell to your children, they want to make your children the vehicles for the advertising as well, to sell their ideas to you (through nagging) and to their friends, through "look how cool this game is Timmy" peer pressure conversations. 

Kids are most susceptible to buying games, which are usually free to try, and advertised as free, but then once play for about 5 minutes, they are asked to pay. These fees are small- usually a dollar to five. Kids may not realize that when they are continuously downloading these games, they are also starting to accrue a pretty hefty bill, not to the mention spyware and malware that often accompanies these games, making your computer run slow as molasses. Often, if your kids are getting small downloadable games with your credit card information, you will not realize it, since many of them are a few dollars a month, or a one-time-deal of a few dollars. If you are not paying close attention to your finances or to your children's' finances, you might not even notice the missing funds. Since kids are doing it directly and interacting with the companies themselves, you might not know that the 3 dollar charge on your statement with numbers and letters next to it came from an internet download.

Malware and Spyware
In addition to the direct monetization of your children's activities online, there are also much more nefarious activities to worry about, such as spyware that comes with virtually every download (even your anti-virus probably spies on your activities in order to improve their products). While some spyware really does gather information for the sole purpose of improving their product (including your anti-virus program most likely), other programs are not so benign.

Some products, including "free" games marketed to your children turn out to be quite costly when you find that the game included malware that was able to capture your keystrokes when you logged into your bank account.

Education
The first step to protecting your children from financial predators is to become aware of the way advertising targets them, and make sure your children are aware of the marketing ploys all around them online. Let them know about phishing scams and "contests" so that they do not give away private information at any cost. Kids (especially the young ones) don't need to understand all of the nuances of marketing to know when their being taken advantage of. They may not appreciate a parent's perspective (or directive), but knowledge is power and teaching your children how to identify when they are being marketed to is an extremely important life-skill. An educated child at least has the opportunity to make a conscious choice.

Necessary Information
Most of the legitimate free games will only require age and parental consent, not address or credit information. If you set limits for the amount of games they are able to download a month, clothes they are able to buy online, or whatever they might be persuaded to spend money on, and stay strict about it, you should see savings, not to mention set a positive financial example for your children. At a minimum, kids should be made aware of what information is appropriate to provide and to whom.

Marketing targeted towards children is nothing new- they do it on television, on cereal boxes, books, magazines, and other forms of media every day. However, the internet has opened up more of an opportunity for companies to target and take advantage of children and their finances. If you have not done so in a while, you may want to make sure to clear your cache, set stronger passwords on your computer, and have a conversation with your children about how they are not to download any program without talking to you about it first, or give any address or credit card information to anyone over the internet.

This informative article was written by our guest blogger Stacy Nguyen; Stacy Nguyen is a mother of two wonderful children and has grown accustomed to how integrated the world-wide-web has become in their lives. She believes that open and honest conversation is the best defense against online predators (in any form). When not parenting, she serves as a freelance writer for the firm of Price Benowitz, LLP where a dedicated Virginia personal injury lawyer is always available for a free consultation.

Find more info to help keep your kids safe from predators see earlier blogs on: identity theft and children.