Just when you thought Justin Bieber couldn’t possibly exert any more influence over his teen fan base, it was announced the pop prince is encouraging minors to spend more of their parents' cash with a new prepaid debit card.
Bieber, 19, inked a lucrative deal with BillMyParents to endorse its teen-focused SpendSmart prepaid card, for which he is reportedly being paid $3.75 million for a 14-month contract, plus monthly royalties linked to the growth of the card, and an option to buy two million SpendSmart shares.
According to the New York Times, the average age of a SpendSmart user is 16, and the card is most often used to purchase fast food, gas, gadgets and clothes. The card has a monthly fee of $3.95, which translates into around $50 annually, additional charges to load money onto the card ($2.95 from a debit or credit card or $0.75 from a checking or savings account), a lost card replacement fee of $7.95, ATM fees of 50 cents per balance enquiry, $1.50 every time cash is withdrawn, and a $3 charge if the card inactive for 90 days.
Which experts tell us adds up to one thing: Parents beware!
“It is a good thing and part of parenting to teach kids how to manage their money responsibly, but there are different ways to go about it,” Michelle Jun, Senior Attorney at the Consumers Union told FOX411’s Pop Tarts column. “This card is in the middle of the pack, it is not the cheapest card. It is good for young consumers to learn financial responsibility; however we still live in a world where you build your world and financial history with credit and at traditional institutions like banks and credit unions. This card is middle of the road; there are definitely cards out there that are lower.”
According to Vladimir Nardin, Consumer Trends Expert for the Opinion Corporation, a leading source for customer reviews, the big winners are Bieber and SpendSmart.
“Celebrities sell and Justin Bieber has a great deal of marketing influence and a huge social media outreach, so this will likely put peer pressure on teens and subsequently their parents to set up these accounts. The issuing company will get instant access to this market for an essentially unregulated gift card that has a pretty steep drain on the funds compared to a normal credit or debit card which is great for the card company,” he explained. “The only good thing I see for parents is a way to control spending, though I'm not sure that this product is the best way to teach kids about spending because the fees are a little higher than typical bank card products.”
Bieber, who earned $55 million last year alone, insists in a commercial for the card that money in his family was scarce before he hit the big time.
“You know when I was a kid; we didn’t have a lot of money, so me and my family had to watch the money that we spent. I learned that if you have $100 or $100 million, if you spend more than you have you are going to go broke,” he says in a video sent to his 30 million Twitter followers and 48 million Facebook fans.
And there are some who say his card offers lower fees that others in the prepaid market and comes with an array of features designed to teach teens about sensible spending, including an option for parents to instantly alerted when the card is used through a text message or phone app, and the ability to block purchases and lock the card at their discretion. The Better Business Bureau (BBB) also gives SpendSmart a an A+ rating, as it has received just 19 complaints since it became accredited just over two years ago, mostly due to billing/collection issues and problems with product/service, all of which has been listed as now closed.
Yet some parents remain skeptical.
“I wouldn’t get it for my children, but my sister’s daughter is just crazy about Bieber,” said mom Jennifer Brawley. “I think he is past his prime in the U.S. and the kids that loved him four years ago are likely too old to think he’s cool anymore. My kids think he’s way too much of an idiot with the way he wears his clothes, so aren’t interested in the card anyway.”
Reps for Bieber and BillMyParents did not respond to a request for further comment.
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