Celebrity-Backed Financial Tools for Teens Spur Federal Scrutiny

Online celebrities, startups, and big-name financial institutions are targeting teens as the latest lucrative market for fintech products—and they’ve caught the eye of the Federal Trade Commission.

Companies such as Greenlight based their business model on offering debit cards, budgeting features, or beginner investing tools to minors, while financial institutions including Capital One Financial Corp. and Fidelity Investments expanded services to target younger users. Investors have also thrown hundreds of millions of dollars in the last decade into deals with financial technology startups that cater specifically to teens.

Jimmy Donaldson—better known as MrBeast to 470 million Youtube followers—and Beast Industries are the latest to enter the market with a February purchase of Step, an all-in-one fintech that says it aims to build money smarts in teens and young adults.

But consumer and privacy activists say that fintechs can trap younger customers with unfair fees, deceptive practices, and opaque data protection regimes. Sen. Elizabeth Warren (D-Mass.) cited concerns March 23 over Beast Industries’ foray into the space and potential crypto offerings for teens, while an FTC official earlier this month warned the agency will investigate teen-focused fintechs this year.

Children under 13 are covered by the Children’s Online Privacy Protection Act, but teens lack those additional privacy protections at the federal level. The Trump administration’s neutering of the Consumer Financial Protection Bureau largely eliminated the federal regulator policing fintech violations of disclosure and fair lending rules. The FTC’s renewed attention to teen-focused fintechs will test whether it can fill the gap.

Fintechs focused on teens should be mindful the FTC is watching, even if there are questions about the tools at the agency’s disposal, said Dona Fraser, senior vice president of privacy initiatives at BBB National Programs, a self-regulatory industry group.

“We have reached out to some companies who are in the fintech space to talk to them about teens and their teen products. And it’s been a real struggle to get them to prioritize it,” Fraser said.

Chris Mufarrige, director of the FTC’s bureau of consumer protection, said in a statement the agency will use “all its available tools including law enforcement actions to protect children,” whether promoting age verification technologies or “protecting children from deceptive billing practices.”

Targeting Teens

MrBeast is just the latest celebrity to pitch financial products to young audiences.

Others who have sought to capitalize on their followings to get into the space include the Kardashians with their ill-fated Kardashian Kard and pop star Justin Bieber.

These fintechs pose the same concerns for teens about disclosures and high fees that consumer advocates worry about for all customers. The difference is older borrowers may be able to better weigh costs, said Jonathan Joshua, a financial regulations specialist at Joshua Law Firm LLC.

“The risks obviously might be different in that teens are generally accepted to be even less knowledgeable and sophisticated than even college students, and more impulsive,” he said.

MrBeast’s reach is far greater than other celebrities offering fintechs, raising the stakes for his entrance into the market, said Alex Johnson, a host of the Fintech Takes podcast and industry consultant.

How fintech firms communicate to teens has fueled concerns, specifically the trend to “gamify” financial services offerings for teens.

Companies have “to be careful that you’re not luring them in, that you’re not creating manipulative patterns, deceptive patterns, dark patterns,” Fraser said.

Beast Industries CEO Jeff Housenbold said in a February CNBC interview MrBeast planned to use gaming tactics to boost financial literacy through the Step acquisition.

“Nobody taught me about investing, building credit, or managing money when I was growing up. That’s exactly why we’re joining forces with Step!,” Donaldson said in a post on X announcing the deal. “I want to give millions of young people the financial foundation I never had.”

Housenbold and Step didn’t respond to requests for comment.

Plugging Privacy Gaps

Fintechs are at heart data companies, and heavily-online teens present a ripe target for targeted advertising and other uses.

“The goal of so many businesses today is to get different kinds of data from someone and mix it together to create a dossier,” said Adam Schwartz, privacy litigation director at privacy advocacy group the Electronic Frontier Foundation.

Regulators have sought to fill in data protection gaps in the last five years, with states such as Arkansas and Colorado extending COPPA’s privacy protections to consumers under 18 and others including Connecticut narrowing exemptions for companies already complying with financial regulations such as the Gramm–Leach–Bliley Act.

FTC’s Role

While Warren raised concerns about Step, there have been no CFPB enforcement actions against the company, and a review of court dockets showed no consumer class actions related to product offerings.

FTC’s Mufarrige, meanwhile, has twice this year pointed to fintech’s targeting of teens as an area of interest.

The FTC could look at how fintech’s practices may be perceived by teens as “reasonable” consumers, a benchmark under Section 5 of the FTC Act used to determine whether a business practice is deceptive, said Laura Riposo VanDruff, partner at Kelley Drye & Warren LLP and a former FTC official.

Targeting teens could warrant stronger guardrails from businesses, such as making sure terms of use are easy to understand.

Other concerns from consumer advocates and Warren also stem from the maturity of companies targeting teens. While banking institutions have extensive experience adhering to the Truth in Lending Act, the Equal Credit Opportunity Act, and other federal consumer financial protection laws, younger startups may not prioritize data protection the same way.

Banks providing accounts and other services targeted at minors have more robust oversight from federal regulators, even with Trump administration efforts to roll back examination and enforcement.

“With my kid, I’d want them at a traditional bank,” said Carla Sanchez-Adams, a senior attorney at the National Consumer Law Center.