7 ways to teach your children to be scam-savvy

As you teach your kids to manage money in an age that’s increasingly all-digital, all-the-time, make sure to include lessons on protecting their privacy and recognizing digital fraudsters.

You try to prepare your children for whatever life throws their way, good or bad. When it comes to finances, that could mean passing on your values about money and sharing what you know about smart spending, prudent borrowing and steady saving. But you may want to add one more lesson to that list: a keen eye for scams.

While you may know the signs and dangers of financial fraud — malware, phishing schemes, theft of personal data — don’t assume your children do. A 2023 study from Deloitte found that members of Gen Z (born between 1997 and 2012) were three times more likely than Boomers to fall for an online scam. And they’re more than twice as likely as Boomers to have their social media accounts hacked.

By preparing your children for the risks they face and the signs to look for, you can help them protect their future financial health — and potentially safeguard the entire family’s personal information. Here’s what you need to know to help.

How online scams happen

Scammers reach out to teens where they spend time online. Indeed, the top three ways scammers target teens are through social media (55% of teens reported being contacted via social), gaming platforms (38%) and text messages (37%), according to a 2023 Better Business Bureau survey. Scammers may pose as your teen’s most ardent fan on their YouTube channel, strike up chats on gaming platforms and text them blindly, hoping they’ll click on an appealing link.

“Scammers are becoming more and more sophisticated,” says Katie Galan, director of education at the Better Business Bureau in Corpus Christi, Texas. “They’ll lure kids with gaming codes or cheat codes to start a conversation online, for instance.” Once they target a teen, she adds, scammers may groom them for weeks or months, gradually getting information they need to commit financial crimes.

What scammers are after

Teens may not have a lot of assets that scammers can steal, but fraudsters still see them as a high-value target. Why? First, they may be able to use them to get their parents’ personal info, credit card numbers and more. Second, beyond doing immediate damage — such as making fraudulent charges on mom and dad’s account — scammers want names, addresses and other private details they can use down the road to hijack a teen’s yet-to-be-established credit, according to Galan.

“Children don’t have a good understanding of the concept of credit, and it may take them years to check their credit report for the first time and realize there’s a problem,” Galan says. Meanwhile, someone was posing as your child in the financial realm all that time. “A credit issue can follow teens into adulthood,” Galan says, impacting their ability to rent an apartment, qualify for a car loan and even get a job.

How to help your kids fight back

To help your kids become vigilant against these attacks, talk to them about the most common scams and what they should be aware of while using their phones and visiting their favorite digital platforms.

1. Teach your child financial literacy. Instilling healthy money habits at a young age and explaining the basics of personal finance, including how credit works, can help your children understand what’s at stake. For teens, that might mean giving them the freedom to spend money with a debit card that you can monitor and control, such as the Greenlight app.

2. Point out signs of a scam. Explain that legitimate businesses won’t text them asking for a full address or Social Security number. The proper response? No response. Tell them not to answer unsolicited texts or emails. And if they aren’t sure if a message is legit, keep calm, ask mom and carry on.

3. Combat “cookie” scams together. Teach kids about “cookies” in the cyber realm. Make sure they understand that most sites they visit keep tabs on their browsing activity and collect data about their interests and hobbies. As a parent, you can help keep your child’s devices safe with anti-virus protection, software updates, strong passwords and multi-factor authentication.

4. Encourage skepticism of social media ads. Tell teens to be wary of links that look too good to be true. If they want to act on a great deal, explain that they should go directly to the business’s official website and look for the deal there.

5. Advise caution about peer-to-peer payments. A recent Consumer Reports report found that two thirds of Americans use peer-to-peer payment apps like Apple Cash, Zelle and Venmo. Among 18- to 29-year-olds, it’s four out of five (and many use the apps at least once a month). With this growing popularity comes the rise of digital payment scams. For example, fraudsters may send you money via the app and then ask for it to be returned. When this occurs, experts say not to engage: Contact your bank or the payment platform instead and let it handle any refunds.

6. Keep credit card info off a smartphone. Sounds like a no-brainer, but kids may not understand what a hassle credit card fraud can be. Once your child has their own credit card, go over the basics of keeping card information safe.

7. Limit in-app purchases. Avoid keeping a credit card on file in your child’s gaming system or on their apps, Galen explains — or at least require they enter a PIN that you’ve set to make a purchase. This may feel like a hassle every time a kid wants to buy a new “skin” on Fortnite, but it’s worth it to prevent unauthorized purchases. Plus, it’s better not to give your kids free rein when it comes to spending your money.

The idea of your children being scammed is scary, for sure. But by giving them a strong grounding in money management, teaching them the signs of fraud to watch for and encouraging a cautious approach to online interactions, you can rest a bit easier.

Talking about finances is another way to set your family up for success. Here are some tips and information to help you kick off the conversation.