eBay May Open Accounts to the 18 and Under Set -- Should You Bite?

Are we creating a nation of young entrepreneurs with these lenient Internet policies, or are we just providing kids with a larger outlet to spend?
08/09/2012 10:33 am ET Updated Oct 09, 2012

Let the tween bidding wars begin.

Last week, eBay announced it was considering allowing kids under the age of 18 to create user accounts with parental supervision. Right now, the site requires users to self-declare they are 18 or over before creating an account.

The announcement brings to mind a debate that surfaced last month when Facebook announced it might allow children under 13 to create accounts, provided they have parental supervision.

The question we have is when it comes to kids, is the Internet good or evil? In the case of eBay, is allowing young children to have accounts a good tool to encourage entrepreneurial spirit, or is it a gateway for teens to access an unlimited marketplace of video games, graphic t-shirts and Justin Beiber posters?

In other words, are we creating a nation of young entrepreneurs with these lenient Internet policies, or are we just providing kids with a larger outlet to spend?

The Internet Generation
Kids ages 8-18 spend nearly eight hours a day with a computer, smart phone or electronic device and, as they become increasingly tech-savvy, they are finding ways to work around online age restrictions. Case in point: A 2011 Consumer Report survey found that 7.5 million Facebook users were under the age of 13 -- even though the site has a minimum age restriction of 13.

For eBay, it's a bit different. Unlike social networking sites like Facebook, eBay's main objective is commercial: Users exchange real money for real goods. Even so, as both eBay and PayPal, its main payment partner, depend on users' honesty about age when signing up. It would be easy for teens to subvert the process.

Given the trend of illicit membership, eBay views these "student accounts" as a way to create oversight for younger users. As the company's President of Global Marketplaces told The Wall Street Journal, this system should "legitimately bring younger people in," allowing eBay to "peel back some of the anonymity" currently in the system.

Will eBay Replace the Way Kids Shop?
It's not entirely clear whether the online marketplace will be a huge draw for a younger audience. Ed Mierzwinski, a director at the U.S. Public Interest Research Group, told The Wall Street Journal that kids are the emerging market for these companies, noting that "they dictate what the family buys" and "they are going to be the most brand-loyal."

But many surveys suggest that teens have yet to embrace online marketing. As SmartMoney reports, only 7% of girls said they prefer buying things online; with boys, the number rises to 15%. A key limitation? Only 6% of teens reported having credit cards.

Additionally, as shopping malls have traditionally been both a commercial and social center for teen life, in-person shopping still seems to have a significant draw for this age group.

So, Is This Good News or Bad News?
Experts are torn over whether these student accounts will be beneficial or detrimental.

For one, there are basic dangers in creating an online personality for a child. Tara Kennedy-Kline of the parenting site Multilevel Mom has been running a successful eBay store with her father since 2005. "People have to know where you are, where their products are coming from [and] how they can get ahold of you," Kennedy-Kline said. "You're really putting your child into an entrepreneurial setting where they're going to be completely visible to anyone."

Plus, she added, "people on eBay are not friendly."

There are business issues as well. Kennedy-Kline runs the distribution for her store, and wonders about the host of financial issues -- international shipping regulations, sales taxes and more -- that come with running a small business. "Someone from France could buy your kid's friendship bracelet," she points out. "And if [your child] makes more than $600, are they going to have to file an income tax statement?"

Despite these concerns, Kennedy-Kline believes that if parents and children work together and cooperate on these new accounts, the concept has potential. "Children have amazing entrepreneurial spirit," she said. "Their imaginations are so fantastic, and [they have] a willingness to learn."

Ensuring Protection
When it comes to safety issues, if your own child is interested in setting up an account, Kennedy-Kline recommends you control the email address so that you can monitor all communication.

eBay appears to be making security a priority with its new system as well. Wenig told The Wall Street Journal that the company "would want an adult as a ride-along" for all student accounts for that specific reason.

eBay representative Kari Ramirez told us that the company is working closely with parents and kids alike to determine the best user experience. "We are... gathering insights from parents and students on the design of our program, ensuring that we meet the requirements for an engaging and trusted experience," she told us, and confirmed that the student account pilot program would be introduced sometime in the next nine months.

Even legislatures are weighing in when it comes to kids' online safety. Just this month, the Federal Trade Commission made moves to update the 1998 Children's Online Privacy Protection Act. Among other things, the FTC will look to prevent advertisers from tracking children's online behavior and stop third party sources (like social networks on iPhone apps) from asking children for personal information.

What About the Future?
It's unclear whether online commerce sites like Etsy and Bonanza will follow this trend of engaging younger users with official accounts. Both sites point out in their User Agreements that kids under the age of 18 cannot enter legal contracts in most countries, and therefore cannot be regular users on their sites, either.

Etsy in particular notes that the restriction "is for legal reasons, not because we think kids are any less creative or capable." Although representatives from Etsy declined to comment for this story, the site does recommend that users under 18 start a collective -- a store with multiple owners -- to set up a shop "that their parent or legal guardian manages."

After a few years of lower profits, eBay has recently been making a comeback in the tech industry. One of the major factors of this success has been the company's mobile app, which has made bidding for and purchasing items online dangerously easy via smart phone (eBay told us that 1.9 million new items are listed via mobile each week, and a woman's handbag is purchased on eBay mobile every 30 seconds).

Given that 23% of kids ages 12-17 have smartphones, these student accounts could be the beginning of a new style of shopping.

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