Evan Schuman's StorefrontBacktalk

The benefit to retailers—beyond the legal ability to enforce payment—is youth CRM, which is virtually black market today. “Not only do we know what these kids are buying, we know what the kids want to buy” courtesy of the app’s wish-list function. “We’ll be the first company that will have this data.”

There are two levels of aging out at issue. The biggest federal enforcer of child marketing rules is the Child Online Privacy Act (COPA), but it only regulates those 12 and younger. “At the age of 13, the COPA rules go away,” Webber said.

That means 13-year-olds can receive offers directly from retailers (although Webber said her company’s initial approach will be to send any offers to the parents only) and they are eligible to get their own debit card.

At 18, all restrictions come off, legally.

For retailers, though, there are two categories of youth-marketing problems: First, that which is clearly illegal. Second, that which may be permitted, but it is perceived as offensive and invasive by parents. When selling to children, excessive cautiousness is not a bad thing.

Another delicate issue deals with children who, while online, say they are adults. If an 11-year-old shopper without a payment card says that he or she is 19 years old, can the retailer be penalized for marketing to him or her, assuming the retailer had no legitimate reason to suspect the true age?

At least in-store an associate can make a guess based on physical appearance, clues that do not exist online.

Let’s get back to that initial question: If a company such as Virtual Piggy has access to all of these purchases, and then a child ages into an adult, should it be able to sell that data in an identifiable form—thereby tying a specific purchase history to a specific consumer? Webber said she has no intention of doing that, but would it be legal?

The intent of the youth rules is to stop direct marketing until consumers are old enough to make their own decisions, an age the U.S. government has decided is 18. This is not like juvenile criminal records, where the intent is to keep the data secret always, so that that adult need not pay for the things done when he or she was a child.

But here, if the consumer is now seen as having acceptable judgment, why not allow for more targeted messages? After all, this consumer has a healthy purchase history.

This is squarely in the legal but tacky category. Newly authorized 18-year-old shoppers—and certainly their parents—have an expectation of privacy of their youthful purchases. Even if offered such data, a retailer would be wise to refuse to avoid the radioactive fallout.

When Walmart rolled out its E-Commerce cash program, one of the many advantages was that it would provide a mechanism for children to make online purchases, as long as they could later (within 48 hours) get to a Walmart store and finalize the purchase with cash.

Unlike Virtual Piggy, Walmart will likely have no idea of the age of the customer, so the retailer would have no reason to treat that purchase history any differently. In this case, a little ignorance can be a nice thing.