By Michelle Bowes
Today’s kids have access to both a vast online world and prepaid Visa cards from as young as six. Coupled with their limited financial knowledge and trusting nature, it’s a potent combination that could be costly if you’re a parent, but lucrative if you’re a cybercriminal.
Statistics from the Australian Competition and Consumer Commission’s (ACCC) Scamwatch show Australian kids lost $360,000 to scams in 2022 – although the watchdog acknowledges that most scams go unreported, so the number is probably far higher.
There are a number of scams that children and teenagers can fall victim to.Credit: Digital Vision
For kids using their own cards, the potential losses are limited. However, if they have access to your credit card the exposure could be far higher. So, how do scammers target kids, how do you protect them, and what should you do if they fall victim to a scam?
Online shopping scams aimed at kids usually feature popular brands. A common one is a social media message telling them they’ve won a $500 Shein gift card. This scam directs them to a third-party website to provide their details (including banking details) to claim the fake gift card. What they’re actually signing up for is a direct debit that will fleece them of upward of $50 a fortnight.
Their desire for the latest ‘it’ item can also make kids vulnerable. For example, a pair of Nike Air Jordan 1s for $150 from what looks like a legitimate online retailer may seem like a steal compared to the usual $250-300 price tag. It’s certainly a steal, but of their money when the product never arrives.
Social media sextortion scams are also common, with teenage boys usually the target. Befriended by a scammer posing as a teenage girl, after some risqué chat they’ll be asked for an explicit picture, and the scammer will then demand money in exchange for not posting it. The eSafety Commissioner says there were over 1700 reports of this type of sextortion scam in the first quarter of 2023, up from 600 for the same period of 2022.
Those familiar with popular online games played by kids, such as Roblox, Fortnite and Minecraft, will know they often have in-app currency, paid for with real-world money. Some parents provide their credit cards for in-app purchases, but kids with a prepaid Visa or Mastercard can use their own.
Online gaming scams typically take two forms. Most commonly, users are lured to an external website with offers of free in-app currency in return for account login information, which scammers then use to steal the card details linked to the account. Kids can also be ripped off within the game if a fellow (and probably older) user suggests a trade of items they’ve each bought, only to not deliver on their end of the bargain.
Kids are also used as leverage in a common financial scam targeting parents. The ‘Hi Mum’ What’s App scam involves the scammer impersonating the target’s child, who claims to have lost their phone to justify the contact from an unknown number. The lost phone ruse also means the ‘child’ can’t access their online banking, leading to a request for money to help replace their phone or pay an urgent bill. According to the ACCC, this scam cost parents $7.3 million in 2022.
To avoid falling victim to these (and other) scams, teach your kids that if a deal seems too good to be true, then it probably is and that a Google search of reviews will prove if a retailer is legitimate.
It’s also good online practice to verify that a person is who they say they are and to be careful about the information you share about yourself – whether that’s login details, card details or private images.
Reassure kids that they won’t be in trouble but should tell you straight away of a suspicious approach. And if they’ve been scammed contact your, or their, bank to lock the card and report the transaction.
The bank may be able to track the transaction and block the scam account, helping others to avoid similar scams. Reporting the incident to the website, platform or game where it occurred and to Scamwatch may also help others avoid falling victim.
Michelle Bowes is a personal finance journalist and author. Her book, Money Queens: the teen girl’s guide to money, is available in bookstores and online now.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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