When it comes to teaching kids about money, there are two important elements:
How to make money (earning and growing)
How to keep hold of your money
The second part, holding on to their money, is becoming increasingly challenging—especially with the rise in scams targeting kids.
I've written about how parents can teach their kids about scams in previous blogs and in my book, Grandpa's Fortune Fables. In this blog, I want to highlight a few new scams I've heard about targeting kids, such as Money Mules.
Before I share these scams, I want to stress the importance of teaching your kids the classic saying:
"If something sounds too good to be true then it probably is!"
This has to be drilled into your kids to help them keep their money as they grow up. However, the question is ...
"What is too good to be true?"
This might feel like an easy question for some adults, but many kids don't have a reference for what is 'good' and what is 'too good' regarding money.
For my kids, I've talked to them about investing in the stock market. The average return over the long term can be around 7% to 10% per year on average (in the short term the actual returns lot more or less than this).
I use this range as a benchmark. I want my kids to question any financial proposals they get which are offering them a return that is materially higher than this. This is not to say that an opportunity that offers a return above 10% per year should be avoided but it should be treated with caution and they should seek other opinions to make sure it's not a scam.
For example, if someone offers them an opportunity to make 10% in one month, rather than one year, then this should be setting off alarm bells. Even if their friends invested in these opportunities and got 10% over one month doesn't mean it's sustainable over time or it isn't a scam.
Now, let's look at some new scams that are targeting kids - I hope you share these with your kids.
New Scams Targeting Kids
Money Mules
Scammers are targeting kids who have their own bank accounts. They offer to transfer money to the kids and then ask the kids to transfer some of the money to someone else. They state that the kids get to keep some of the money.
The email might look like this:
Hi [Name]
I hope this message finds you well! My name is Alex, and I’m looking for a trustworthy partner to help me with a quick business opportunity that could earn you some easy cash.
Here’s how it works:
You’ll receive a transfer of $1,000 to your bank account. This is to help fund a special project I’m working on.
After the transfer is complete, all you need to do is send $800 to another account (I’ll provide the details), and you can keep $200 for yourself!
It’s a simple and easy way to make money without any risk. I know it sounds too good to be true, but I assure you this is legitimate.
If you’re interested, just reply to this email with your bank account details, and I’ll get everything set up right away.
Looking forward to working with you!
Best,
Alex
For a lot of kids, this seems like a great deal. Easy money!! They are also helping someone. You can see why a lot of kids would take this offer.
The scammers are doing one or both of the following:
Money Laundering: They are transferring illegal money (dirty money) from some criminal activities. This dirty money can be traced so the scammers don't want it going into their own accounts. Therefore, they look for people to accept this dirty money (your kids) and then the money your kids transfer out into the scammer's account comes from a legal source (clean money). This practice is illegal and everyone involved in money laundering, even kids, can get in trouble with the law.
Stealing Bank Details: The scammers never transfer money to your kid's account but instead use your kid's bank account details to spend on different things or just transfer money to their own accounts.
These scammers are targeting kids with wealthy parents, e.g., largely private/international school pupils, as they expect that these kids will have their own bank accounts with money in them.
Kids should never give their bank details to anyone who approaches them out of the blue. Regardless of how good the deal sounds.
AI-Generated Article Scams
With AI, scammers can create some very official-looking news articles which highlight how other kids have made money quickly. These articles show photos or even videos which make it look like a sensible person is endorsing the opportunity.
Below is an example article. It highlighted how someone called Charlotte Walsh made a lot of money quickly. It talked about how Charlotte was discussing this opportunity on Good Morning Britain TV show. They even had a photo of Charlotte on the show (see below) and states that the TV presenter opened a new account to make money.
This is a scam. There is no Charlotte. She was never on Good Morning Britain. The photo is a fake but looks real, as does the article. It was created via AI.
The scammers are trying to get people, including kids, to sign up for a trading platform which offers very high returns. In this case, saying Charlotte was earning over $85,000 per month.
Once people sign up, the scammers encourage kids to transfer more money but then disappear and your kids never get their money back.
This scam works well as kids see the article and will think 'Surely it's real if it's been discussed on Good Morning Britain and the sensible presenters are even signing up!'.
Online Game Currency
Scammers are posting on social media about special deals regarding digital currencies used in popular online games.
Message: "Hey, Fortnite Fan!
Are you tired of running low on V-Bucks? We have an amazing opportunity for you! You can earn FREE V-Bucks by completing a few simple tasks!
Click the link below to take our short survey.
Download our app and complete the in-game challenges.
Get your V-Bucks transferred to your account instantly!
👉 [Fake Link Here] 👈
Don’t miss out! This offer is only available for a limited time. Start earning V-Bucks today!
Happy gaming!
The V-Bucks Team"
In these cases, the scammers could be taking personal data which they'll use or sell. Or they are adding harmful apps on your kid's phones/tablets. These apps can take personal information and/or bank information. There are cases where they are offering discounts for currencies. In this scenario, kids are transferring money directly to the scammers and never seeing any rewards.
READ NEXT: Avoid These 3 Money Sayings
Financial Education Program for Schools: If you are teacher, or working as part of a school, and feel that a financial education program that helps students manage their money before they become adults (including how to avoid scams), then please check out our Financial Education Program here
Summary
I hope you make your kids aware of these scams. Even young kids need to be aware of these scams so they know what to look out for as they grow up.
If something sounds too good to be true, then it probably is!
Please talk to your kids to help them understand what is 'too good' so they ask the question 'Is this true?' (even if it looks very official and others are doing it).
Scammers are getting smarter, especially as they are now using AI. Therefore, as parents, we need to do more to make sure our kids are aware that these scams exist.
Please share this blog with other families to help more kids stay safe from scammers.
Thanks for reading - don't forget to subscribe for more money tips for kids.
Will
P.S., For younger kids, grab them a copy of Grandpa's Fortune Fables so they can learn about Scamming Sam and other money lessons via fun stories. Available on Amazon.
