Safeguarding podcast – Digital Wallets & Dark Patterns of Persuasion with Rick Lane, Iggy Ventures

By Neil Fairbrother

In this human rights safeguarding podcast with Rick Lane of Iggy Ventures, we discuss updates to Section 230, COPPA and the WhoIs issue, national security concerns caused by TikTok, the regulatory splinternet, digital wallets and why the US is a laggard in adoption, the 4th C of the CORE report, and a worked example of a COPPA-compliant digital wallet.

https://traffic.libsyn.com/secure/safetonetfoundation/SafeToNet_Foundation_podcast_-_Digital_Wallets__Dark_Patterns_of_Persuasion_with_Rick_Lane_Iggy_Ventures.mp3

There’s a lightly edited transcript below for those that can’t use podcasts, or for those that simply prefer to read.

Welcome to another addition of the SafeToNet Foundation’s safeguarding podcast with Neil Fairbrother, exploring the Law, Culture and Technology of safeguarding children online.

Neil Fairbrother

The COVID 19 pandemic has resulted in children spending not just more time online, but also spending more money online and as a result of that, children as young as six are being offered financial services, the proponents of which claim help educate children on how to handle credit, or debt as it’s otherwise known. Although not everyone agrees with this point of view, the fintech for kids industry is worth some $530 million in the us and provide youth focused prepaid debit cards, bank accounts, and even investment accounts. To guide us through the risks and safeguards of digital wallets for children, we’re joined once again by Rick Lane of Iggy Ventures. Welcome back to the podcast, Rick.

Rick Lane, Iggy Ventures

Thank you for having me,

Neil Fairbrother

How’s your year been Rick?

Rick Lane, Iggy Ventures

Been better than last year with all, you know, being able to go out and see people and engage and interacting with family and friends so better than last year and hopefully 2022 will be even better.

Neil Fairbrother

Well, indeed, indeed. Could you remind our audience please, of your background and experience?

Rick Lane, Iggy Ventures

Happy to. For the past 30 plus years, I have been involved in almost every major technology policy related issue, both domestically here, mostly, and obviously some across the pond in the EU, in the UK. I’ve worked on the issues on around child’s privacy, cybersecurity, copyright as well as data breach and even helped draft the Electronic Signatures Act, the eSign bill, which basically became the foundation for blockchain that made it legal for people to sign documents online.

Neil Fairbrother

Okay, thanks for that. Now before we get onto FinTech for kids you very recently gave testimony to the Subcommittee on Consumer Protection and Commerce at a hearing entitled “Holding Big Tech Accountable; Legislation to Build a Safer Internet. And you said in your testimony that “…four key changes are required to make a more safe, secure, and sustainable internet, which will require Congress to focus on the following issues: reforming Section 230, creating more transparency about internet platform operations while protecting user privacy, restoring access to the WhoIs database and updating the Child Online Privacy Protection Act, otherwise known as COPPA”. Could we just very quickly get an update from you where we are with all of those things? We have discussed Section 230 in some detail before, where are we with that, Rick? And what kind of reform do you think is necessary?

Rick Lane, Iggy Ventures

Well Congress is really moving forward quickly now on all of these issues, which is a great sign of things to come and a better 2022. The other good thing that they’re doing is they’re looking at them in a holistic approach. You know, all these issues are always interrelated, as we have talked about in the past, and you have to make sure that they all can work together and that was a big focus of this last hearing.

I think they’re all being looked at and a lot of discussions going forward, but I think we’re beginning to narrow the differences. The best thing about the hearing last week and in the Senate as well, is that you can’t tell the Democrats from the Republicans. The consensus of wanting to make changes is real. That’s always the first step to, you know, not just identify the problem, but say the problem needs to be fixed. And the second part is how do we get there? And the lines are getting closer and closer of how we do that.

Neil Fairbrother

Okay. And specifically on the issue of Section 230, it seems to be a very controversial change to make not least of which is the area around liability for content or immunity from liability for content and whether online service providers are publishers or not. Are these areas that up for change also?

Rick Lane, Iggy Ventures

Well, I always like to say, we have to focus on the conduct versus the content. Here in the United States ss you know, we have a very strong 1st Amendment right and getting after what we call the “awful but lawful” content is very, it’s really difficult to draft the rules and laws around that. We have seen that in a couple of cases, State cases in Texas and Florida, where the courts have basically put a hold on those laws until further discussion can happen around the 1st Amendment.

And so that part of it is difficult to solve, but the area of holding websites and platforms responsible for their conduct, that drumbeat is getting louder and louder and that’s where there is growing consensus in at least fixing that. And the other area would be the transparency area that you heard a lot about during the House hearing as well as the Senate hearing, and also in the UK, they have a transparency piece as well. So that consensus around transparency to the algorithms as well as the conduct of these sites is where I think the, you know, the Venn diagram comes together to get something through.

Neil Fairbrother

Well, indeed I was in fact going to ask you about that. There does seem to be quite a parallel there between the UK and US and indeed other countries around the world. Australia, I think is looking at an online safety approach, an online safety bill along similar lines and I think Ireland as well. One of the issues that you raised in your testimony was the WhoIs database issue, which as I say, we did a deep dive on this in a previous podcast and it is quite complicated, but could you give us a brief reminder of the key issue here and what can be done to fix it?

Rick Lane, Iggy Ventures

Sure. The WhoIs issue is an issue that was created in response to the European Union’s GDPR regulations. I believe it was sort of an overreach by the what are known as the contracted parties, the Verisigns and the Go Daddys of the world in trying to shut down the WhoIs and access to WhoIs, and having to keep an accurate WhoIs. Also to shield themselves from liability, which gets actually into the 230 issue as well, I’m happy to talk about that, but Congress is, you know, awakening. I mean, this was the first hearing and this was a legislative hearing, which is very important, t wasn’t an oversite hearing. It was a legislative hearing of what steps Congress should take in a legislative process to help protect its citizens from harm on the internet. And one of the members of Congress, Congressman Lata talked specifically about the WhoIs issue and the letters that he had received from the Federal Drug Administration, from the Federal Trade Commission, from the Homeland Security about the harms and risk and cybersecurity threats that a dark WhoIs is creating to US citizens. So on that front, I think members are becoming aware of this concern and are no longer taking the bureaucrats and NTIA’s word that be fixed at the ICANN multi stakeholder level.

Neil Fairbrother

Yes Rick, you suggested that this was actually a consumer protection issue?

Rick Lane, Iggy Ventures

Yes, absolutely. It always has been, you know, the old cartoon from the New Yorker where, you know, there’s a picture of the dog behind a computer, and the saying says something like “You don’t know that the person on the other side of the computer is a dog”. And the answer to that is they were right, but that’s what WhoIs was all about. It was about allowing consumers whose information is being collected or who are spending money on a website to know who is behind that website from a consumer protection standpoint. It’s also consumer protection standpoint because every Phishing attack, every cyber attack, every malware attack, every ransomware attack comes from a top level domain, a GTLD or country code. But if you don’t have an open accessible WhoIs, you don’t know who’s behind those general top level domain names, and you put yourself at risk. So when you think, and someone’s getting fished and they want to try to stop it, the Justice Department or Homeland, or whoever happens to be the Federal Trade Commission, wants to stop a phishing attack and they run into a dark WhoIs, that’s a problem, and that’s a privacy issue because that’s my information being stolen with no recourse, no ability to find out who is on the other side of that website.

Neil Fairbrother

Okay. And the final point just before we leave this section was referring to the COPPA, the Child Online Privacy and Protection Act and a revision of that. This is where the age of 13 as a minimum age to be online comes from. I know it wasn’t originally intended to be that, but that’s how it’s become used. What would you expect a revision of COPPA to include?

Rick Lane, Iggy Ventures

Actually Neil it’s under 13, so it’s 12. I expect a couple things to happen in this space. One, that the age limit will be raised. I think it should be 17 and under and not 16 and under as some of them are talking about. I think it should be 17 and under and I also think what’s going to happen is you’re going to have potentially a change on the liability standard. I think that’s probably one of the more controversial aspects of the COPPA changes.

But also I’m hoping that there are some discussions around this idea of getting rid of what are the self-regulatory compliance organizations out there. I did talk about that my oral testimony raising concerns, if we got rid of that, that’s also could be harmful from a parent’s perspective of not having sort of a good housekeeping seal of approval that is backed by the Federal Trade Commission. Hopefully they won’t change that. I understand the arguments of why some people don’t like it, but I think that’s a discussion that we need to have. And then obviously this FinTech child privacy protection gap that I talk about.

Neil Fairbrother

Yes, we’ll come on to that in just one moment. So just to clarify, the age of 17, you’re not saying that’s the minimum age to be online. What it is, is the minimum age for a child to give permission for their data to be collected. I think that’s deal?

Rick Lane, Iggy Ventures

The question is “opt in” versus “opt out” the age old dialogue and debate about opt in versus opt out. And COPPA is an opt in regime and is parental consent, which is key. It’s not the child gets to opt in but the parent has to actually opt in for the child. The question then becomes for 17 and 16 year olds and 15 year olds, should it be the parent who has to opt in for that child, or should it be the child? Maybe they’re old enough at 15, 16, and 17 to be able to opt in, but know exact what they’re opting into, because in an opt out world, unless you are specifically opting out of everything, they can do whatever they want with your data.

Neil Fairbrother

Two other upcoming pieces of legislation. These have always got very long titles or at least their working drafts do. So there’s HR 3991, the Telling Everyone the Location of Data Leaving the US Act and HR 4,000, the Internet Application, Integrity and Disclosure Act. Very quickly, what are they Rick?

Rick Lane, Iggy Ventures

The TEL Act introduced by representative Jeff Duncan basically requires websites and apps to let their users know if their information is being stored in China and if that corporation is headquartered in China. The Kinsinger Bill does similar things in terms of notice around the issue of where companies are headquartered that are engaged in online activities to US consumers.

Neil Fairbrother

Right. Okay. That sounds like it’s aimed a particular service provider?

Rick Lane, Iggy Ventures

It’s aimed at a particular country! But there’s a lot of, I mean, TikTok obviously has a lot of issues here in the United States. A lot of concern is growing around TikTok from both a child safety perspective, a manipulation perspective and a national security perspective. And so, yes, there’s a lot about TikTok, but there’s other companies out there that are engaging in activities that could be harmful that are not TikTok.

And the way I put these bills are they’re sort of a teachable moment because, you know, if you’re putting your information on a site that can be controlled or accessed by a country that could be potentially hostile to the United States, do you want to do that or not? So it doesn’t ban these companies from coming to the United States. It’s a notification of transparency bill. So it’s a sort of a way to educate individuals in the United States of where their information is being housed.

But as I said in the oral testimony, I think that’s a great first step, and I think it should be expanded because sometimes it doesn’t matter where the information is housed. If the information is housed in, for example, Singapore, it doesn’t mean that hostile regimes don’t have access to it. As I said in my oral testimony, my photos are stored in the cloud somewhere. I don’t know where, but in fact I can access them. I can print them, I can manipulate them. They don’t have to be housed here in, you know, the State of Maryland or Washington DC or the US even for me to do all those things. So the legislation is a great first step, but I think it just needs to be expanded to understand who’s able to access it and what ways and what legal ways they can do it.

Neil Fairbrother

Okay. You also talked about GDPR. Now I don’t know if this is possible to do, but could you give a brief succinct definition of what GDPR is?

Rick Lane, Iggy Ventures

I cannot, <laughs>, that’s a whole like two hour podcast of what GDPR is. And it also depends on who you talk to, to define what GDPR is. And that’s part of the problem on the WhoIs side. And that’s where my focus is on GDPR. I think GDPR may have some great aspects to it. I’m not the expert on GDPR and the ramifications. And to be honest, the GDPR, as long as it’s not impacting the health and safety and security of the American people, that’s the EU law, and they can pass laws as they see fit for their citizens just as we should be able to here in the States. And so you try to make sure that they can work together, but at the same time sovereignty, you know, is a real thing and I think the EU can do what they need to do in their view. And so we shouldn’t, you know, we can try to talk to them, but at the end of the day, it’s their decision to make.

Rick Lane, Iggy Ventures

Yes, well, this does raise quite an interesting point really because at the moment you know, you’re based in the US, I’m based in the UK. If I log into my Facebook account, I’m essentially entering US territory, you know, Facebook operates under US law, but I’m actually physically located in the UK. As you know and as you just referred to the UK is making rapid progress with its Online Safety Bill. So are we inevitably going to have a “splinternet” of regulation?

Rick Lane, Iggy Ventures

I don’t think we have to go that way. You know, I’ve had this conversation from the beginning. What I always hated the term was the “free flow of information”. I hated it for two reasons, because sometimes people think “free” means that information should be free and you can take anybody’s information or data and do what you want with it or their content creation. But it also means that the internet, and you hear this term all the time, is borderless and therefore rules shouldn’t apply. I think what I always like to call it is the “seamless flow of information”. And what I mean by that is you try to create areas [that are] sovereign. The internet is as borderless as Earth, right. You know, from space, the Earth is borderless. But there are borders here and there is sovereignty just like you have on the internet. The internet is no different.

People like to think it is because you can flow back and forth, but rivers flow across borders and we still have sovereignty, you know, so we have to look at it as you try to work within the regime of the countries and the cultures that have different histories than ours. And you try to bring as much together as you can, which is why I say it’s a seamless flow, where there’s going to be some things that you cannot do and you have to be, as a multinational corporation, aware of.

And if you’re going enter into that country’s legal regime, you’re going have to abide by those countries’ legal regimes. That’s a corporate decision. That’s not an internet decision. And so what you hope is you can create through treaties and other mechanisms, bilateral or multilateral treaties, or other rules of law of how you can have the seamless flow of information going from point A to point B. And an example of that is the conversations ongoing now between the US and the EU on privacy and data.

Neil Fairbrother

Okay. So, digital wallets. Research suggests that the UK is ranked 3rd in the use of mobile and digital wallets and the US is ranked a surprising low 7th. So China is first at 47% of the population using mobile and digital wallets followed by Norway, UK, then Japan, Australia, Columbia, and the United States. And that surprised me. I thought the US would be much further up the rankings than that. Why is the US, do you think, so far behind?

Rick Lane, Iggy Ventures

It’s shocking to me as well. So I don’t have an answer of why we’re so far behind, but it’s not unprecedented. If you think about text messaging, SMS, you know, I remember going to Europe and the Europeans were texting one another. I’m like, what’s that new technology, you know? We weren’t even close to using it here in the US. So there are other countries obviously can be ahead of us in terms of some of the uptake of digital technologies, especially in the mobile space. I mean, China has always been on the mobile side far ahead of us in what they and so it’s not a shock that we may not be completely as advanced in our usage of digital wallets as other countries, but it doesn’t mean that we won’t be very soon. And that’s what we’re working on here in the States.

Neil Fairbrother

Okay. So a digital wallet, the clues in name, it can be used like a bank card, a debit card often, but the number of the card isn’t actually stored on the device, they have a unique digital account number which is assigned to the card and to the device that the person is using and that is how I guess security is provided. But also a digital wallet can be used, not just for payments. It can also be used for storing other life important documents, such as airline tickets, driving licenses and the like. So are these a step towards an age verification system or even a digital ID system, do you think?

Rick Lane, Iggy Ventures

Yeah, I think, you know, digital wallets is a very broad term. So, you know, what do you put in your own wallet, right? In your physical wallet. I have a bunch of things in my physical wallet and that’s just been digitized, right? So there’s a variety of things. And there’s this push here in the US and around the world to, you know, e-verification. NIST is having, you know, round tables and studies on how we do this. And so there’s a lot going on in that side of the space. But also what I am focusing on in the digital wallet space here is really the financial transaction side of the digital wallet. How are you able to use digital wallets going forward to buy merchandise or buy goods and services?

Neil Fairbrother

And the digital wallets aimed at children, I think tend to be digital debit cards as opposed to digital credit cards. Is that a reasonable assumption?

Rick Lane, Iggy Ventures

Yes, it is. It’s the debit side versus the credit side, mostly because the way the digital wallets are working is that they’re being filled by their parents’ accounts and the banking accounts. And so having a credit card versus a debit card in the digital space, doesn’t make much of a difference. But it creates a little bit greater control of the expenditures that a child may make versus, you know, here’s a credit card, you put a limit on it, but it could be, you know, a $5,000 limit and all of a sudden there’s $5,000 of charges that you’ve never approved.

Neil Fairbrother

Yeah, indeed. Now I said in my intro, and it was in an article I read that while some of these digital debit cards or digital wallets are available for teens, 13 or older, there are many kid-focused debit cards available to kids as young as six, which does seem astonishingly young.

Rick Lane, Iggy Ventures

Well, it’s not when you think about it from the perspective of us, especially after in this, you know, kind of post COVID world, where we are moving to a more cashless society. And so when your seven or eight year old is going to, you know, up the street to the ice cream store to get ice cream, you know, you used to be able, you know, you’d give ’em, you know, $10 and they would buy ice cream. Now they can just have, you know, some of these kids much younger age have cell phones and so that they could, you know, use their cell phone to make the purchase for ice cream. And so we are changing in that space or even a, you know, a physical debit card and use that. But we are moving to a cashless society.

We had an issue here in the States during COVID where a lot of stores weren’t taking cash. One concern was about transmission of COVID, but also they didn’t have change anymore. They didn’t have the nickels, the quarters or dimes and the pennies to give you change. And so, you know, there was a shortage of sort of physical currency. And so the digital wallet, debit or credit card became much more you know, prevalent through the country’s marketplaces and online and offline stores. And you remember, you can’t use cash in the online environment, that’s something they haven’t figured out quite yet. And so a digital wallet provides the ability for young people to buy products online.

Neil Fairbrother

Yeah. And presumably for the young child walking down the street with a smartphone the digital wallet is perhaps a little bit more secure because the smartphone itself has so many security features; Face ID, fingerprint ID, all those kind of things before you get at the digital wallet, whereas a bundle of dollars can be nicked out of your pocket?

Rick Lane, Iggy Ventures

Or taken from you which is even worse. So yeah again, we’re moving into this cashless society, digital wallets, it’s easier for accounting purposes. It’s easier for a whole set of safety and security reasons to have digital wallets which is different than digital currencies. I wanna be clear on that. We’re not talking crypto at this point. That’s a whole, maybe another podcast that we could have Neil. But in the digital side and traditional debit space of how we transact more and more younger people are engaged in the use of debit cards and credit cards. And that’s part of the problem, why we have this FinTech child privacy protection gap, because a lot of these issues weren’t discussed when the original legislation protecting both children 12 and under in COPPA or Gramm-Leach-Bliley Act, GLBA, and the financial services, which was, you know, targeted 18 and older.

Neil Fairbrother

Yeah. Now that last piece of legislation you mentioned just to be clear that’s the Gramm-Leach-Bliley Act 1999, which you said is also known as GLBA for short. And that requires financial institutions, companies that offer consumers financial products or services like loans, financial or investment advice, or indeed insurance, to explain their information sharing practices to their consumers and to safeguard sensitive data. Now we can look at two sides of that. So explaining their information sharing practices, that has some resonance with online safety and safety by design, because one of the key planks of all of that is to explain to children in age appropriate language what’s going on. But classically financial services are even more complicated than online social media services and online media services are not that well explained. So how can they be clearly explained to children so that they are comprehensible and children understand the implications of what they’re doing?

Rick Lane, Iggy Ventures

Well, if anyone’s ever received a privacy statement from their bank or institution here in the United States, no one understands it. No, everyone just, they get ’em every, you know, I think it’s twice a year now you get ’em, you open it up, you see it’s the privacy statement and you just throw it away and you hope that’s somebody who is more interested will find problems and let everyone else know, is sort of how it works. And that’s the optout world that we live in, in the Gramm-Leach-Bliley world, GLBA world is an optout. And the more interesting is you can actually only opt out of non-affiliate sharing, so that means if I am a financial institution and there is a third-party data broker, the customer can opt out of sharing with that unaffiliated data broker.

But if it’s an affiliated part of the company, then information sharing, there’s no ability to opt out of even that. So think about it in the age where you have financial institutions and social networking entities like Venmo kind of coming together, and you have this optout regime of GLBA versus an optin regime of the child online privacy protection act. And that’s where the problems come in and getting to your question about understanding the notices.

Remember the kids aren’t reading these notices, a child in the United States cannot apply for an account in the financial services area unless they’re 18 or older. So the only ones who can sign up that child is a parent or guardian. And the problem is, is that most parents or guardians right now don’t realize or think about, and I include myself in this and you know, I’m supposed to be quote a privacy expert, and yet I never thought about when I signed my boys up at the age of 14 for their first credit cards to opt them out of tracking in the sharing of their info information. I just didn’t think about it. And that’s where we are at this point. And that’s part of this education process to let parents know that when they’re signing their kids up for these financial instruments, these debit cards and the physical debit cards or digital wallets that right now they don’t have the same protections as a child going on a website that for 12 and under that’s COPPA compliant.

Neil Fairbrother

Yeah. Okay. So the other part of the Gramm-Leach-Bliley Act refers to the safeguarding of sensitive data and Sonia Livingstone’s Children Online Research and Evidence (CORE) report this year was updated from the classic three C’s of Content, Contact and Conduct to include a fourth C, which is Contract and the report highlights under the Contract part, the new fourth C, dark pattern shaping persuasion to purchase. Now, there is a lot of data that these FinTech companies can hoover up about children and what they’re doing. What kind of protections are offered to children against that kind of soaking up of all of their privacy data within the world of the FinTech industry, as opposed to the online safety industry?

Rick Lane, Iggy Ventures

Well, there’s really very little to be quite honest. Again, you’re hoping that your parents are aware enough to have opted you out <laugh> of the selling of your information. But they can collect as much information as they want on you and use it internally for their own purposes. As long as it’s not in contradiction to their privacy policies, but the privacy policies tend to be very broad in terms of the information collected and how it can be used internally. And so from a child protection side of things it’s a little scary because you have this ability of these large institutions to gather information on a child’s purchasing habit from 7 until forever until something changes. And that purchasing habit is probably one of the most sensitive types of data that an entity can collect, you know, in the US, we don’t have very, we don’t have broad privacy rules, we have sectoral. And a few of those sectoral rules are finance services, healthcare, movie rentals, so that’s an interesting story in of itself on how that happened and then you have education information, right? That has some restrictions, so we have very sectoral rules.

In the financial services, because of the intersection in this new digital economy where the online world is becoming part of the in-person world, and more and more with this whole idea of the metaverses and the issue around VR and augmented reality and when you walk in stores, those worlds are combining. And so as a public policy matter, we need to look at, as those worlds come together and collide, how are we protecting children’s financial information as much as we’re wanting to protect information when they’re just on a social networking site?

Neil Fairbrother

Yeah. This collision of worlds is a really interesting area. The sectorization or silos you could call them versus a broader cross silo, or cross-cutting as it’s called in Sonia Livingstone’s report, the Children Online Research and Evidence report, they have a cross-cutting section where these common attributes for online child safety could conceivably go, so that they are consistent across all of these different sectors.

Rick Lane, Iggy Ventures

Yeah, no, absolutely. I mean, we have to look at that. But here in the United States, we have a unique opportunity because as COPPA has always been its own separate silo, in a sense, it is not as hard for us to update COPPA to bring in the financial services side of this as us trying to pass more macro general privacy rules because of the silos, right. The big hurdles here in the US is where you have sort of the issue of federal preemption over the state laws, and then private rights of action are the two big barriers, but the other barriers that fall into this is this where we have sector specific privacy legislation like under healthcare for HIPAA or Gramm-Leach-Bliley, and how do we input or ensure that we don’t lose those specific protections as we’re doing a more macro general privacy law.

And that becomes very complicated and is something that most people don’t think about or talk about. But as you look at privacy laws, there’s always, you know, does not impact any other existing privacy law or doesn’t, you know, impact HIPAA and get specific in terms of legislation. But even like, if you look at healthcare information, you know, is an AppleWatch a healthcare device, right? Because it’s monitoring my heart and it has probably as much information on my health as my doctor does, especially on a daily basis. And does that fall under the HIPAA rules and the HIPAA laws of privacy?

Right now the argument is “it depends”. <Laugh> so that part becomes very complicated in the general privacy regime because of the way our structure in the US is on privacy. But on the child side we already have federal preemption with COPPA, you know, the rules of the road are not undercut by certain state laws. And we have a mechanism of enforcement which is the Federal Trade Commission and that has a long history of case law and regs and rules and processes, and to deal with the focus on children’s privacy.

Neil Fairbrother

Okay. You’re involved Rick now with a digital wallet service provider, I think called Mazoola and as a financial infrastructure, they are compliant with both COPPA and GDPR. So what does it mean to say that they are compliant with COPPA and GDPR?

Rick Lane, Iggy Ventures

Sure. And there’s getting back, there are processes that you have to go through to be GDPR compliant, as well as COPPA compliant. I’m much more familiar with the COPPA compliance process than I am the GDPR. But basically there’s an entity called Privo that’s very highly respected both at the FTC most importantly, but also within the family and business communities. And they go into the company, they put the privacy and collection and use of children’s data through a whole process to make sure that it’s meeting all the requirements of COPPA in terms of its protection, handling resale, all the other aspects that fall within COPPA.

Privo is an entity that is certified by the Federal Trade Commission to give its own certification and it creates a nice little chain of compliance that’s important both from a business side. So, you know that you’re compliant because they’ll come up with ideas like, oh, we didn’t think of that. Right?

So if you’re trying to build a product from the COPPA compliant from the ground up, you wanna make sure that you hit all the right pieces of it to make sure that you’ve done it from the ground up and before you release it, you have the certification that says, yes, you’ve made all these changes. If you do make changes to the app or to the website, you have to get re-certified and there’s a whole process in that as well.

The company Mazoola, well, the app is Mazoola. The company is called Rego, the parent company, but their product is the Mazoola and it’s the first COPPA compliant family digital wallet in the United States. And the only one in the United States.

Neil Fairbrother

Okay. Now one of the features I think that has, is that parents are notified when kids make a purchase. And so the child might want to buy something, they may be playing a game and they might be stuck in a game, grinding away in a game, to get to the next level. And they decide to short circuit the grind and buy a loot box to hopefully get a better weapon or a better player or whatever. And that purchase needs to be approved by the parent. I think that’s the way it works?

Rick Lane, Iggy Ventures

Yeah, well, the parent can stop the purchase, right? The beauty of this product and why I wanted to be part of it and put my reputation behind it was that it had a lot of great child safety features in it. One, you know, the parental notification when there was a purchase. Two, where you can actually use the digital wallet. So you pick as a parent what places the wallet would be accepted. So if you want it to be accepted at Walmart, Best Buy, a sporting goods store, in your local ice cream parlor, and maybe this one gaming area, then you say yes, but everything else, when they try to use it, is blocked automatically. And as the child gets older and expands, you can open up more and more retail stores to them and let them make those purchases, which we think is a great sort of like training wheels when they’re younger and as they get older, they get more and more responsibility.

The other great function that it has in there is that it allows the parents have to approve anybody who is putting money into the digital wallet. And as we know, from a child safety perspective with Venmo and some of these other types of digital wallets that are out there, strangers are putting money in and the parents don’t know.

Neil Fairbrother

Yeah, that’s classic kind of grooming technique is to charge kids’ accounts with cash. So presumably this would eliminate that aspect at least?

Rick Lane, Iggy Ventures

It would. And then, so the parents or guardians have to approve who’s allowed to put money in. And so you have that side of it protected, but it also has some great tools on financial literacy, because it has savings where you can save up for your bike or an Xbox or whatever you happen to wanna buy and have a whole savings side of things. It also allows you to, for the kids to donate to charities that are, you know, pre-approved by the parents. So which charity that would they like to give to. So if they’re getting money for their parents for different chores and you know, getting an allowance, they can say, oh, well I want 10% of my allowance to go to a charity and they can pick those charities.

So it really creates a mechanism for young people to know how to save, spend and donate and do all these things that are important that a lot of kids don’t learn until it’s too late and also, you know, making sure that they have the cash to spend versus running out, you know. One of the big problems with debit cards and credit cards from a parent perspective is that the kids think it’s a magical card that you give to somebody and you get something in return and isn’t that wonderful. And the parents are the ones paying the bill at the end.

With this digital wallet they can see their money draining down. And when they get to zero, like back when I was growing up, you know, my parents gave me, you know, $20 for the week to live on. I knew when I got to that dollar either that’s it for me, or I have to ask my parents. Nowadays you know, you don’t have to do that per se with a debit card, but this way, you know, also you don’t get hit with expenses because it’s drawn down on the money you have, or you can see, so you don’t have overdraft issues and things like that.

Neil Fairbrother

Is there a conflict of interest between the child’s right to privacy to spend versus the parental right to parent?

Rick Lane, Iggy Ventures

I think that’s up to the parent <laugh> As a parent, if I think my kids shouldn’t be spending my money on certain things, I have every right as the financer of my child’s activities to control that money. You know, if they want to go out and get a job and get their own money and spend it the way they see fit you know, with cash, you know, they’re more than welcome to do that within limitations. But you know, I don’t think it’s giving up parenting. Every child’s different and all your kids are different. So having the parental controls in place so that the parent can make those decisions of how tight or loose they want to be, I think is a critically important role that parents have. And guardians have. Especially in this age where there’s just so much being thrown at these young people that it’s difficult sometimes for them to make the right decisions.

Neil Fairbrother

Okay. Time is moving on. We’re rapidly running out of it. So a couple of very quick questions if I may just to close off. According to a 2018 study by Javelin Strategy and Research, more than 1 million children were victims of identity theft in 2017 at an estimated cost of some 2.67 billion. And more than 80% of these children were 12 years or younger. Does the use of digital wallets increase or decrease the risk of ID fraud?

Rick Lane, Iggy Ventures

Well it depends. If you’re using the Mazoola digital wallet, it decreases. If you’re using others where their first name, last name and the number is on their card and they have their pictures on their card and you’re able to track, and there’s a data breach with all the information and that information is put out there and they’re able to match your child’s information with their social networking websites and the platforms, yeah, I think it becomes a problem in certain circumstances. But the one thing that we do with Mazoola is that we don’t collect any information that can identify the child from the child at any time. So even if we got hacked, it would be impossible to find out what children are part of the Mazoola system. And that I think is critical. So we, you know, we have in place, you know, instead of anonymising data for kids, it’s anonymous data for kids and when they make a purchase it’s anonymous purchases. And from that standpoint, from a data breach standpoint, from a ID theft standpoint, that’s one of the things that really made me excited about joining and helping the Mazoola team move forward with their product.

Neil Fairbrother

Thanks very much Rick, for that. I think we’re going to have to call it a day. We are out of time, but what’s next for Mazoola?

Rick Lane, Iggy Ventures

Well, I think it’s really adoption. You know, we’re hoping that as we educate parents on the huge benefits that the Mazoola app can provide to them and their children in terms of safety, security, and functionality, that it will ramp up and really set the industry standard. If you’re going to target digital wallets and debit cards towards kids, even, you know, 17 and under, or under the age of 12, that you need to have higher standards. And we think the Mazoola app will set, is setting, that standard and will continue to set that standard. And we hope to be an industry leader in this space.

Neil Fairbrother

Okay. Well, good luck with all of that, Rick.

Rick Lane, Iggy Ventures

Well, thank you.