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How parents can protect teens from mobile app payment issues

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As latest peer-to-peer payment app options emerge for teenagers, experts say it’s a possibility for folks to show their kids use these financial tools correctly — and educate them on avoid common pitfalls.

Venmo on Monday unveiled a latest linked teen account that oldsters can open with select features for teenagers 13 to 17 years old. While some teenagers already use Venmo, individual account holders have to be at the very least 18 years old, or the age of majority of their state, per the app’s user agreement.

This is not the primary peer-to-peer payment app to expand to teen users. Money App, Square Money and Apple Wallet also offer features for teens, albeit with parental supervision. PayPal, parent company of Venmo, still requires users to be at the very least 18 years old, or the age of majority of their state.

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The Venmo teen account features a debit card and may be funded by a parent’s Venmo account through any linked sources. Parents can monitor their teen’s payments and friend requests, in addition to control privacy settings.

Apps are ‘convenient,’ but woes may be ‘difficult to repair’

Peer-to-peer payment apps, also referred to as P2P apps, are widely in use throughout the U.S. They’re utilized by 64% of adults, including 81% of those ages 18 to 29, based on a 2022 report from Consumer Reports.

Teresa Murray, a consumer watchdog on the U.S. Public Interest Research Group, urges caution when using P2P apps. “There are real consequences if something goes improper,” she said.

U.S. PIRG examined nearly 9,300 complaints received by the Consumer Financial Protection Bureau between April 2017 and April 2021, and uncovered a pattern of issues amongst several P2P apps with digital wallets, scams and customer support.

“People use these P2P apps because they’re convenient they usually’re easy,” Murray said. “But it’s extremely inconvenient when something goes improper.”

“It’s difficult to repair it, and folks just do not realize that up front,” she added.

Nearly one-quarter of users have reported sending money to the improper person, a 2022 survey from LendingTree found, while 15% have been victims of scams.

“We now have a zero-tolerance policy on our platform for attempted fraudulent activity, and our teams work tirelessly to guard our customers,” a PayPal spokesperson told CNBC. “We encourage customers to all the time be vigilant online and to contact customer support directly if they think they’re a goal of a scam.”

Protecting teens from common P2P payment issues 

Whether your teen is using Venmo or one other P2P app, Murray said, it is vital for each parent and child to be accustomed to the possible risks.

For instance, she suggested that users fund P2P accounts with a bank card somewhat than a checking account because there are greater protections under the Truth In Lending Act and Fair Credit Billing Act if something goes improper. And if you happen to do link to your checking account or a teen’s, keep the vast majority of your money elsewhere.

Murray also suggested only paying “people you recognize well” via P2P apps and asking them to send you a request via the app before making a payment for the primary time. “Once you will have accomplished a transaction, it’s done,” she warned. “You are not getting your a reimbursement.”

Teens must also make transactions private, add extra authentication to access the app from their phone, and be vigilant when sharing their device with others, she said. They might also thwart scammers by never sharing authentication codes with anyone.

Talk over with your teens about money 

As your teen learns about budgeting and payment apps, experts urge parents, it is vital to debate these topics with them at home.

“One of the best tip I can offer is to maintain that communication going along with your teen about money,” said Desiree Kaul, an authorized financial planner at Important Street Planning in Satellite Beach, Florida. “So long as your child feels comfortable asking you questions, they are going to all the time have someone to show to once they want a solution.” 

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