Surprising numbers of children have invested in cryptocurrencies online as a way to ‘secure their future’ – with nearly one in four aged between 13 and 16 either investing in them or planning to. The findings are revealed in a report launched today by Internet Matters, which is urging parents to speak to their children about the risks of being targeted by scammers and calling the government to do more to address the dangers.
The report shows that 8% of children have already invested in cryptocurrencies despite the risk of scams, while 15% of children are looking to invest. The top reason (49%) given was to secure their financial future – worrying given the level of financial risk involved in trading in cryptocurrencies, especially against the backdrop of the cost of living crisis.
Four in 10 (40%) of those who have signed up to crypto or would do, said it was ‘to earn lots of money’, while 38% saw it as ‘the future of money’. Nearly one in 10 children surveyed (9%) had invested in non-fungible tokens (NFTs).
The report showed that the primary concern among both parents and children who are familiar with cryptoassets, including the ones who would not consider investing in them, was the risk of falling victim to cryptocurrency or NFT scams. The top three risks cited by parents and children are falling victim to fraud or scams (46%), children being taken advantage of and encouraging them to buy crypto (35%) and people trying to target or steal from children (35%).
Internet Matters today calls for more action to be taken from the government to protect children from these dangers. The Financial Conduct Authority is targeting more UK crypto firms with a growing number of fake investment scams being investigated as the most vulnerable in society, including children are being targeted by scammers.
The report highlights that children should be given due consideration by policymakers when formulating regulations concerning cryptoassets, rather than treating their needs as a secondary concern. In the government’s 82-page consultation paper on cryptoasset regulation, the words ‘children’, ‘young people’, ‘parents’ or ‘families’ do not appear anywhere.
And despite the impact financial harm can have on children’s lives, it is mostly out of the Online Safety Bill’s scope, with the exception of paid-for scam advertising. Internet Matters is calling for new anti-fraud lessons, promised in the recent Fraud Strategy, to include a focus on online scams and cryptoassets.
The ongoing involvement of parents and professionals such as teachers in this area is of significant importance. This underlines the relevance and value of recently released media literacy strategies by the Government and Ofcom. In the absence of regulation designed to protect children from the risks of NFTs and cryptocurrencies , Internet Matters has provided parents with advice on how to support their children from these dangers.
Simone Vibert, Head of Policy and Research at Internet Matters said: “Despite the interest among children in cryptoassets, the unregulated crypto market is rife with scammers who are taking advantage of users, including children, seeking to invest in their futures. While children might be aware of this risk, it does not necessarily stop them from engaging.
“Our new report paints a concerning picture. If more children are getting involved with these digital assets then there needs to be better protection for them as we know online financial scams are common. It is welcome that the government is stepping in and regulating cryptoassets, but it needs to acknowledge that children are dabbling in this space and respond appropriately.”
Katie Watts, Head of Campaigns at MoneySavingExpert said: “This report brings to light a real gap in protection for young people who see crypto as a part of their financial lives, but are rightly worried about the consequences – and in particular, scams.
“Fraud is the crime that people in the UK are most likely to fall victim to, and crypto, with its promises of big returns, is a huge feature. Scammers use every trick in the book to get people to part with their cash – including jumping on cost of living fears and ‘cool’ crypto trends. Not only do they fraudulently steal real cryptoassets, but they also get victims to buy into fake schemes that don’t exist at all.
“The Online Safety Bill, when it becomes law, will place a duty on social media firms and search engines to prevent and take down scam adverts that they are paid to publish. But the law won’t cover all forms of online advertising, like ads that are seen by both children and adults on other websites. That’s why the Government must move at speed on its work investigating the rest of the online advertising market, to close this gateway for scammers to target consumers – especially children – leaving their limited finances, mental health and self-esteem in ruins before their financial lives have even really begun.”
Investing in cryptoassets inherently comes with some risks, but if you decide to do so, here are Internet Matters’ expert tips to keep your children safe from NFT and crypto scams:
By taking these steps, you can help your children navigate the world of NFTs and cryptocurrencies safely, while also instilling responsible financial habits and critical thinking skills.
The best way of protecting children from the risks is by stopping them from buying/selling/trading in them, but for those who choose to participate, please follow these tips to help reduce the risks:
1. Educate yourself: Learn about NFTs, cryptocurrencies, and the risks associated with them. Remember cryptoassets are not regulated in the same way as normal financial services, so you will have limited protection, if any, if something goes wrong. Internet Matters has a page on its website – https://www.internetmatters.org/resources/what-are-nfts-and-cryptocurrency/
2. Encourage kids to apply a ‘Should I trust this?’ checklist – This should include asking themselves these questions:
● Do I trust that the URL of the cryptocurrency website is legitimate? Check against other sources like social media profiles and price-tracking websites.
● Is this trending cryptocurrency too good to be true? Don’t buy into the hype, do your homework first, not everything that is heavily promoted is real.
● Is this post from an influencer real advice or an ad? All post that are promoted by influencers need to be flagged, watch out for #Ad on the post.
3. Do research before investing – Advise your child to do a search of the cryptocurrency name or company alongside keywords like ‘scam’, ‘fake’ and ‘review’ to see if there is any mention of potential risks around it.
4. Keep apps official – Download crypto mobile apps from official stores like Google Play and Apple App Store. If your child is asked to download them outside these stores this is known as ‘sideloading’ and they run the risk of downloading a fake mobile wallet and getting their cryptocurrency stolen.
5. Keep credentials private – Encourage your child never to share cryptocurrency wallet information with anyone. People may ask for it to allow you to take part in an investment opportunity, but it can be a scam to steal your money.
6. Stay updated: Stay informed about the latest scams and fraud schemes in the crypto space. Subscribe to reputable sources of information such as the Internet Matters website and Money Saving Expert to follow industry experts to stay ahead of new threats.
7. Discuss the value of NFTs and how they change.As NFTs’ value goes up and down with trends, it’s important to talk to young people about what a realistic amount to invest looks like and the potential of NFTs losing value very quickly so they are aware of the risk.
8. Report any scams – If you think you’ve been a victim of an NFT scam or you suspect that you’ve been targeted by one, you can report it to the NFT platform so they can investigate it. You can also report it to Action Fraud online at www.actionfraud.police.uk. –
For more information on how to keep your children safe online and step by step guides, visit internetmatters.org
