Forget the shady gangs of cyber criminals trawling the web for credit card details – your beloved teenager is just as likely to get up to no good with your credit card online and, unless you want the police involved, you have no choice but to pay up.
You have to be over 18 to have either a credit card or PayPal account – the two methods most often used for online payments – but online shopping is hardly an adults-only activity. So when kids are online, they are going to have to use someone else’s account to make a payment.
This is all fine and good as long as all parties involved are aware of what’s going on. But often parents are taken by surprise.
Whether this is due to carelessness on behalf of the parent or some degree of subterfuge on behalf of the teenager (or quite possibly a combination of both), the end result is the same – an unexpected blowout in your credit card bill.
Such unauthorised transactions are likely to make parents mad but probably not mad enough to hand a child over to the police – which is precisely what banks require before they will recompense any such transaction.
Those days are gone
In the old days, authorising a child to use your store card or some other form of credit required a letter of consent. Or you might have used a cheque with non-negotiable scrawled all over it to ensure it was only used for the intended purpose. And of course it could only be used once.
Not so credit cards or online payment accounts. Once your child, or anyone else for that matter, gets the key to that lock, it can be used over and over again. So while you may be OK with buying that new dress for the formal, the bill for the five new pairs of shoes will come as a surprise.
The cheat’s way
If you want to get your money back, you’ll find your rights are limited. Some merchants may refund as long as the item is returned untouched. But they are not obliged to. The cheat’s way out is to declare the goods were not suitable and get a refund that way.
As for the bank which issued the card, well, it may refund as long as you bring in the law.
Australia and New Zealand Banking Group spokesman Stephen Ries says if someone said their credit card was used without consent, the bank would require a report to be made to the police. “If there was a police report we would process a refund but, if it’s a family member we expect in most cases it would be resolved without the involvement of the bank or the police.”
It all starts too easily. All a parent has to do is hand the card over for a few seconds while the details are keyed in. This works well for a one-off purchase but some sites store that data, meaning the account holder can be unaware of subsequent activity on the account.
It’s not just shopping, either. Teens who are into online gaming also make use of their parent’s credit account and the Apple iTunes store is a source of feverish activity. Apple stores all your credit card details so your password to that account is all that stands between you and One Direction downloads.
And the iTunes fine print makes it pretty clear that all of the onus for protecting that account lies with the account holder who is “solely responsible for maintaining the confidentiality and security of the account”.
MasterCard says merchants with adequate security can store credit account numbers, although information contained on the magnetic strip and chip – including the CVC number – should never be stored under any circumstances.
This appears to leave plenty of space for repeat purchases to be made with the card holder not present, or even aware of the transaction.
Many smaller online retailers would rather eat cold porridge than store credit card details, figuring it is not worth the headache or the liability.
“We don’t store any credit card details, so yes, you have to re-enter that data every time,” says Kate Morris, founder of online shop Adore Beauty.
“As soon as you start storing that data you need bank-level security. I wouldn’t want a bar of it. Good merchants will not store your details.”
Erin Hortle, who has been ramping up her teen girl clothing site teentrendz.com.au this year, believes parents should be responsible for their children but if someone complained about a purchase made without permission, she would probably refund on return of goods.
PayPal has heard from a few irate parents and given the matter some thought.
No guarantee, no solution
For starters, there is no guarantee the transaction can be reversed, says spokesman Adrian Christie. “Such cases are considered on a case-by-case basis.”
He concedes the current arrangements are not perfect.
“Kids of a legitimate age who have a bank account should be able to make purchases online . . . many payment companies are looking at ways they can use secure and permission-based technologies to purchase from legitimate websites. But we don’t have a solution at the moment,” he says.
For as long as online purchases require access to an over-18 card, financial planner Suzanne Haddon of BFG Financial Services suggests parents consider giving their children access to debit, rather than credit arrangements.
“There is no way I would give a child a credit card,” Haddon says.
“It’s much better for teenagers to access savings than a line of a credit.” She has advised clients to open an account with “a few hundred dollars” that can be accessed by a teenager through a debit card.
Mummy’s special card
“Otherwise they can click on whatever they like and it seems like those purchases don’t cost anything . . . it’s all on mummy’s special card,” Haddon says.
“We all think our children are wonderful but they can get up to mischief. The reality of our era is they need to learn how to manage their finances. A debit card is a good way to get them used to managing money via plastic,” Haddon adds.