It used to be that you could take quarters down to the arcade or spend a few bucks on baseball cards if you wanted hours of entertainment as a kid. Things aren’t so simple nowadays. Coins and bills don’t work on the internet, and no one collects baseball cards anymore. Apparently kids buy virtual goods now. According to some estimates the market could grow to be as big as $3 billion this year. So let’s say you’re 12 years old and you want to entertain yourself. You’re going to need access to a credit card, or PayPal, somehow. But, as a merchant or a parent, how can you know if a child is using a credit card for good reasons or bad, against your will or in accordance with it? VirtualPiggy, a California-based company, thinks it has a solution.
The FTC is currently revising its COPPA (Children’s Online Privacy Protection Act) guidelines, and it might do away with the most popular method of child authentication at online merchants, known as “email plus”. Email plus simply asks a child to provide her parents’ email address to authenticate that it is OK for them to spend their money and share their information online. But 12-year olds are crafty. According to a blog post by Perkins Coie, a corporate law firm, “The FTC is concerned that children can easily give their own email address or set up a fake email address to obtain consent, and that the availability of email plus has hindered development of new parental consent methods.”
Without email plus, online merchants who sell stuff to kids — think social media gaming companies like Zynga — will find themselves in a bind. Hence Virtual Piggy and VP Authenticate.
“VP Authenticate uses a secure mechanism to validate the identity of both the parent and the child and establishes that the parent has approved the website for use by their child,” said Jo Webber, CEO of Virtual Piggy, in a press statement. “We have designed the service to be simple to implement for the merchant and easy and free to use for the parent and child.”
Virtual Piggy allows parents to create an account, individually select merchants your child can spend money at, set transaction limits at each merchant, and set up alerts for certain purchase amounts or merchants. When a child wishes to buy something, they simply select the Virtual Piggy icon at checkout (at participating retailers) and login from there. Your child gives no information away, and you might get an alert or the purchase might be put on hold depending on your account settings. It costs users nothing.
The VP Authenticate service that Virtual Piggy launched this week extends parental control a bit farther by allowing for parental authentication independent of a transaction. This means that parents can monitor which sites their children are registering with and it can potentially allow merchants to feel confident they are COPPA compliant.
This is a real problem for some parents. It wasn’t long ago that The Daily Show ran a hilarious segment about a game called Tapfish, a virtual aquarium game that makes its money by allowing users — mostly kids — to pay to bring their dead virtual pets back to life. In the segment, correspondent Aasif Mandvi interviews a family whose children blew $1,500 before the parents figured out what was going on. These games are designed to manipulate susceptible users into spending money on things that don’t exist — it’s the entire whale-based business model that Zynga relies on.
So if your kid wastes his time playing with imaginary fish online, maybe Virtual Piggy is for you. It could save you a headache. Or you can just make him go outside. The choice is yours.