Shopping Online and Understanding Cash Apps and Prepaid Cards for Youth: Risks and Responsibilities

In today’s onlife world, online shopping has become a convenient part of our daily lives. However, with this convenience comes vulnerability and the need for safe and secure payment methods. Here are four options that we recommend when making online purchases to reduce the risks specific to online fraud and scams.

#1 – Credit Cards:

Using a regular credit card for online purchases is common, but it’s important to take steps to protect your financial information and ensure a secure transaction. Here’s our recommendations on how to use a regular credit card when shopping online.

• Shop on credible and secure websites only such as Amazon or Apple – we do not recommend using a regular credit card on sites like Facebook Market Place, eBay, or Kijiji. Always make sure that the website you are purchasing from is secure. Look for “https://” at the beginning of the web address, which indicates that the site uses encryption to protect your information. Additionally, look for a padlock icon next to the URL, which is another sign of a secure site. Avoid making purchases on websites that don’t have these security indicators.

• When creating accounts on online shopping sites, use strong and unique passwords. Avoid using the same password across multiple sites, as this can increase the risk if one account is compromised. Consider using a password manager to keep track of your passwords and generate complex combinations that are harder for hackers to guess.

• Whenever possible, enable two-factor authentication (2FA) on your accounts. This adds an extra layer of security by requiring you to verify your identity through a secondary method, such as a text message or authentication app, in addition to your password. This can significantly reduce the risk of unauthorized access to your accounts.

• Keep a close eye on your credit card statements to spot any unauthorized or suspicious transactions. Most credit card companies offer real-time alerts via text or email for every transaction made. By monitoring your account frequently, you can quickly identify and report any fraudulent activity. This option has saved us a couple of times.

• Many credit card issuers offer the option to generate a virtual credit card number for online purchases. This is a temporary card number that is linked to your actual credit card but can only be used for a specific transaction or within a limited time frame. This adds an additional layer of security, as your actual credit card number is not exposed during the transaction.

• Public Wi-Fi networks are often less secure than private networks, making them a target for hackers. Avoid making online purchases or entering sensitive information when connected to public Wi-Fi. If you must use public Wi-Fi, consider using a Virtual Private Network (VPN) to encrypt your internet connection and protect your data.

• Some credit cards offer additional security features, such as purchase alerts, fraud detection, and zero-liability policies for unauthorized transactions. Take advantage of these features to enhance your online shopping security. Familiarize yourself with your card’s fraud protection policies, so you know what to do if your card information is compromised.

#2 – Pre-loaded Credit Cards

One effective way to enhance online purchase security is by using pre-loaded credit cards, also known as prepaid cards.

https://www.forbes.com/advisor/ca/credit-cards/best/prepaid

These cards offer a range of benefits that make them a safer and more convenient option for online purchases. Here’s why pre-loaded credit cards can be a better choice for your family’s online shopping needs.

• Pre-loaded credit cards are not linked to your bank account or traditional credit lines. Instead, they are loaded with a specific amount of money. This means that even if your card information is compromised, the potential loss is limited to the amount loaded onto the card. Unlike regular credit cards, where a breach could expose your entire credit limit, pre-loaded cards minimize the financial risk.

• Unlike traditional credit cards, pre-loaded cards do not require you to provide personal financial information during the transaction process. This adds an extra layer of privacy, as your bank account and credit card details remain completely separate from your online purchases. If the retailer’s website is compromised, your sensitive financial information is not at risk.

• Pre-loaded credit cards are excellent tools for managing your online spending. Since you can only spend the amount you’ve pre-loaded onto the card, it’s easier to stick to a budget. This feature can be particularly beneficial for parents who want to monitor and control their children’s spending. By giving your child a pre-loaded card with a fixed amount, you can ensure they don’t overspend or make 

• Pre-loaded credit cards are widely accepted by online retailers, just like traditional credit or debit cards. They function the same way during checkout, making them a convenient option for online shopping. Whether you’re purchasing from a major retailer or a smaller online store, you can use your pre-loaded card with confidence.

• Pre-loaded credit cards are not tied to your credit score, and obtaining one does not require a credit check. This means you can get a pre-loaded card regardless of your credit history, making it accessible to a wide range of users. It also eliminates the risk of affecting your credit score, which can be a concern with traditional credit cards.

• Since pre-loaded cards are not connected to a credit line or bank account, you can’t overspend or incur debt. Once the balance on the card is depleted, the card simply cannot be used until more funds are added. This feature protects you from accidental overdrafts, which can result in costly fees, and helps prevent the accumulation of debt that can occur with traditional credit cards.

• Pre-loaded credit cards are perfect for one-time purchases or temporary use loke going on vacation. For example, if you’re buying from a website you’re unfamiliar with, using a pre-loaded card can provide peace of mind. Even if the site turns out to be less secure than expected, the impact on your finances will be minimal since the card is not tied to your main accounts.

• Pre-loaded credit cards are also popular as gift cards or for managing allowances for children. By giving a pre-loaded card as a gift or for your child’s spending, you can ensure that the amount is fixed and controlled. This allows you to teach your children about budgeting and responsible spending in a safe and practical way.

#3 – Apple Pay 

For those with an iPhone or iWatch, Apple Pay 

https://www.apple.com/ca/apple-pay

is another great option for consideration when it comes to fraud protection and being scammed online:

• Apple Pay comes with a zero liability policy, ensuring that you’re not held responsible for any unauthorized transactions. This is particularly reassuring when shopping online, as it provides peace of mind knowing that you’re protected against fraudulent charges. In addition to this, Apple Pay offers chargeback and refund options if the goods you purchase are not delivered or do not meet your expectations, further safeguarding your interests.

• Apple Pay transactions are continuously monitored for suspicious activity. If any unusual patterns are detected, such as transactions in unexpected locations or sudden large purchases, you will be immediately notified. This proactive approach helps catch fraud early, often before any significant damage can occur.

• At the core of Apple Pay’s security is the Secure Element chip, which securely stores your device account number. This number is unique to your device and is never accessed by iOS or any other apps. By isolating your payment information within this secure chip, Apple Pay adds an extra layer of protection against unauthorized access and breaches.

• Apple Pay uses tokenization to keep your actual credit card number hidden during transactions. Instead of transmitting your real card number to merchants, Apple Pay generates a unique token that is used to process the payment. This means that even if a merchant’s system is compromised, your real credit card information remains secure and is not exposed to potential hackers.

• To authorize transactions with Apple Pay, you must use Touch ID, Face ID, or a passcode. These biometric or passcode verifications add another layer of security, making it difficult for unauthorized users to make purchases, even if they have physical access to your device.

• Every time you make a purchase with Apple Pay, you receive a notification on your device. This real-time alert system allows you to instantly recognize any suspicious activity, enabling you to take swift action if something seems off.

• Should you spot an unauthorized transaction, disputing it is straightforward. Apple Pay allows you to quickly contact your bank or credit card company to challenge any questionable charges. Given the zero liability policy, you can rest assured that your funds will be protected during the dispute process.

• Apple Pay is fully compliant with industry standards for payment card security, such as the Payment Card Industry Data Security Standard (PCI DSS). This compliance ensures that your transactions are conducted under the highest security protocols, reducing the risk of fraud.

IMPORTANT NOTE – “Apple Pay” vs “Apple Cash”

Apple Cash lacks buyer protection, making it an attractive target for criminals. When using Apple Cash, be aware that sending money to a scammer can result in permanent loss, as chargebacks and refunds are not possible with this payment option – this makes every transaction potentially risky. On the other hand, using “Apple Pay” does offer chargebacks and refunds, thus why we recommend “Apple Pay” over “Apple Cash” when making online purchases. We recommend that you DO NOT use Apple Cash when making purchases online even when requested to do so by the seller.

#4 – PayPal

Another option that stands out for its security features is PayPal.

https://www.paypal.com/us/home

Here’s why using PayPal can be a safer choice than using a credit card for online purchases on sites like Facebook Market Place, eBay, or Kijiji.

• When you use a credit card online, you typically have to enter your card number, expiration date, and security code. This information can be vulnerable to theft if the website is not secure or if the transaction is intercepted by hackers. In contrast, PayPal acts as a middleman, so you don’t need to share your financial details with the merchant. PayPal encrypts your information, ensuring that your credit card or bank details remain private.

• PayPal offers robust fraud protection and an easy-to-use dispute resolution process. If you notice any unauthorized transactions, you can quickly report them, and PayPal will work to resolve the issue. While credit cards also offer fraud protection, the process can sometimes be more complicated and time-consuming. 

• With PayPal, you can set up a secure one-touch checkout option. This feature allows you to make purchases without having to re-enter your payment details each time. This reduces the risk of exposing your financial information, especially if you’re shopping on multiple websites. Credit cards, on the other hand, require you to input your information for every transaction unless you save your card details on the website, which can be risky if the site is compromised.

• PayPal’s Buyer Protection program is a significant advantage. If you purchase an item and it doesn’t arrive or is significantly different from what was described, PayPal can reimburse you for the full purchase price plus any shipping costs. While some credit cards offer similar protections, they often have more limitations and may not cover all types of purchases.

• PayPal allows you to link multiple payment methods, such as your bank account, debit card, or credit card. This flexibility means you can choose which account to use for each transaction without having to enter different payment details each time. It also allows you to manage your spending more effectively by switching between payment sources. While credit cards offer rewards and other benefits, the added security and flexibility of PayPal can make it a more attractive option for online shopping.

• PayPal is widely accepted by merchants around the world, making it a convenient option for international purchases. Additionally, PayPal handles currency conversion automatically, often with lower fees than credit card companies. This can be particularly useful if you’re purchasing items from foreign websites, as it simplifies the transaction process and reduces costs.

• PayPal functions as a digital wallet, allowing you to store funds in your PayPal account. This can be useful for budgeting, as you can preload your account with a specific amount and use it for online purchases. It also adds an extra layer of security, as your credit card or bank account is not directly involved in the transaction.

IMPORTANT NOTE – PayPal Friends and Family Option

As the name suggests, PayPal Friends and Family was created to be used specifically as a way to transfer money between friends and family members. It allows close networks of people to send and receive funds for personal use, as opposed to using PayPal for business-related transactions.

It’s crucial to be extremely careful when using PayPal Friends and Family. While the service is generally safe, some individuals may attempt to exploit others when it comes to online fraud. 

Sometimes, sellers may ask buyers to use the Friends and Family option to avoid fees and potentially bypass tax reporting requirements. Not only does this violate PayPal’s Terms and Conditions, but it could also be a tactic used by scammers.

It’s important to note that PayPal Friends and Family transactions are not automatically protected by PayPal. If you use this option to make a purchase, you won’t have any recourse if something goes wrong or if you’re scammed. We do not recommend that when shopping on site like Facebook Market Place, eBay, or Kijiji that you use the Friends and Family transaction option, even if requested by the seller to do so!

What about other cash Apps like “Venmo” or “CashApp” as an option. These two apps, much like “Apple Cash” are meant to be more like a peer-to-peer payment and DO NOT offer a refund in the case of an online scam where PayPal, Apple Pay, and some credit cards do. It is because of this fact that we do not recommend these types of cash Apps as a source of payment when purchasing items online. 

In today’s onlife world, ensuring the security of online transactions is more crucial than ever, especially for families. By choosing the right payment methods, parents can protect their financial information, their purchase, and make online shopping a safer experience.

Credit cards, when used with caution, offer robust fraud protection and monitoring features, making them a viable option for secure online purchases on well-known and credible online purchasing sites. Pre-loaded credit cards provide an extra layer of security by limiting the financial risk and managing spending more effectively. Apple Pay and PayPal, with their strong encryption and fraud protection features, offers a convenient and secure alternative, particularly for transactions where privacy and fraud protection are paramount on sites like Facebook Market Place, eBay, or Kijiji.

Understanding and utilizing these payment methods not only enhances your online shopping experience, but also sets a positive example for your family. By adopting these best practices, you can better safeguard your financial information, reduce the risk of fraud, and ensure that online shopping remains a more secure and enjoyable activity for everyone in your home. Knowledge and the understanding and application of that knowledge is power!

How Are Cash Apps and Prepaid Cards Being Used By Some Youth?

As a parent or caregiver, understanding the pros and cons of cash apps and prepaid cards for your kids is extremely important. While these financial tools offer convenience for everyday expenses like lunch money, transportation (bus), gas, or small purchases, they also present potential risks that need careful consideration. We have written this article to help you, the parent or caregiver, navigate these options to assist you in making an informed decision when it comes to cash apps and prepaid cards.

As mentioned above, it is important to know that some youth and teens might need cash apps or prepaid cards for various reasons, such as the convenience of handling daily expenses or as a practical way to teach financial responsibility. They might need them for small jobs that they offer, like cutting lawns, where their customer can pay them electronically. These tools can offer a sense of independence and help youth and teens manage their finances under parental supervision.

However, there are less desirable uses that parents should be aware of as well. Some youth and teens might use these apps for activities like purchasing and selling vapes 2/ https://thewhitehatter.ca/vaping/, purchasing explicit content https://thewhitehatter.ca/online-pornography-and-hypersexualization/, purchasing and selling drugs https://thewhitehatter.ca/blog/how-some-teens-are-using-technology-to-purchase-or-sell-drugs-online/ , in-game purchases, online gambling https://thewhitehatter.ca/blog/yes-some-youth-are-gambling-in-the-onlife-world/, and for services rendered if the teen is involved in the sex trade for things like “sugaring”  https://thewhitehatter.ca/intimate-images-nudes-sexting-deepfakes-and-sugaring/. In some cases, we have heard anecdotally from youth that older teens and other adults (pimps and drug dealers) outside the family will act as intermediaries or “money broker” for a fee, so that younger teens can access and download these apps without their actual parent’s consent, adding another layer of risk.

Note – there are now monetization platforms, such as unlockt.me, that also allows a user to download an app directly onto their phone to monetize any picture or video they wish to send to another person. Although you have to be 18+ to use this app, this age gate is easy to bypass.  Unlockt.me also states in their Terms Of Service that the selling of “sexual or pornographic content” is prohibited. However, in doing a quick search of Instagram and TikTok we found several accounts selling foot photos (“piggy pics,” grippers, “footography”), nudes, and other intimate images, with links to unlockt.me attached, usually in their bio.

Although there are several cash apps on the market, anecdotally we have found that “CashApp” and “Venmo” are presently the two most popular with youth and teens.

#1 – CashApp:  https://cash.app

One of the most widely used options, CashApp is available for children as young as 13, with parental approval require. However, there is no way to ensure and verify that the person providing “parental approval” is actually the parent – this is a significant concern. The parent must own and manage the account, but the app’s monitoring capabilities are somewhat limited. CashApp also offers a physical Cash Card that kids can use for purchases.

#2 – Venmo Teen Account: https://venmo.com

Venmo recently launched a Teen Account, available for teens aged 13 to 17. (8)Parents must set up the account on behalf of their teens. Again, and much like CashApp, there is no way to ensure or verify that the person providing “parental approval” is actually the parent – this is a significant concern. Venmo offers no monthly fees or cash withdrawal fees, with some limitations on use. Parents can also choose to set transactions to “private,” enhancing privacy protection.

Before allowing your child to use a cash app or prepaid card, it’s essential to thoroughly research and understand the terms and conditions of each option. Set clear boundaries and guidelines for your child’s usage, and, when possible, monitor account activity regularly. This vigilance can help you spot any concerning patterns or unauthorized transactions early on.

Regardless of which financial tool you choose for your child, maintaining open and ongoing conversations about responsible financial habits is key. Discuss potential risks, such as online scams, peer pressure to misuse funds, and the importance of budgeting. Let them know that once they send money using these specific apps, there is no getting it back even if they were scammed to send it. By staying informed and proactive, you can help your kids navigate these financial tools safely and responsibly, laying the foundation for sound financial habits in the future.

However, a word of caution – if your child has a cash app on their device but doesn’t have a job, and you, as the parent or caregiver, aren’t the one funding it, it’s important to dig deeper. Talk to your child and ask why they have the app installed and where they’re getting the money to use it – two extremely important questions that might provide some insight into what is happening in your child’s life that you may not be aware of!