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The Downside of Digital Confidence

Digital Downside

With every wave of new technology comes new risks. In the financial crime space, particularly scams, we often think of our most vulnerable as the elderly or someone less familiar with technology. Yet the rise of sextortion and youth-targeted scams tells a different story. Young people, fluent in digital spaces, are now among the most exposed. Not because they lack tech skills, but because their constant connectivity creates opportunities that offenders are quick to exploit. Vulnerability is compounded by fear or stigma, which can make it harder for young people to seek help.

Online child sexual exploitation reports climbed 45 percent in the last year[1], underscoring the growing scale of the threat to young people. In sextortion cases, offenders initiate seemingly innocent online connections, often on social or gaming platforms, and gradually manipulate trust to coerce victims into sharing explicit content. Once obtained, the offender threatens to distribute the material to friends, family, or peers unless the victim pays money or complies with further demands.

Disturbingly, these cases are not rare:

More than one in 10 Australian adolescents had experienced sexual extortion in their lifetime (11.3%), one in three of whom experienced more than one instance.
More than half experienced sexual extortion before the age of 16, and two in five were extorted using digitally manipulated material.
Two-thirds of those who experienced sexual extortion had only ever met the perpetrator online.[2]

Youth Exposure Online

Young people spend more time online than any other group. Whether on social media, gaming platforms, or messaging apps, this constant exposure, combined with the increasingly fast and accessible financial pathways, creates opportunities for exploitation. Scams linked to sextortion commonly involve demands via gift cards, digital wallets, or cryptocurrency, making tracing funds difficult and increasing pressure on victims.

Widespread Internet Use, Often Unsupervised:
- 100% of Australian children aged 12–17 use the internet, and among 16–17-year-olds, 91% do so without supervision
- Even among 4–7-year-olds, 87% are online, with 16% using the internet unsupervised.[3]
High Engagement in Risky Online Activities:
- 17% of children aged 4–7 play interactive games and 24% chat via video call — both activities that can increase exposure to online threats.
- By ages 12–15, 54% use messaging apps and 42% are active on social media, making them more accessible to potential exploiters.

Understanding the Harm

The impact extends far beyond financial loss. Sextortion in particular could lead to devastating psychological effects, including shame, isolation, and in the most tragic cases, self-harm.

Psychological and Emotional Consequences
- Trauma and Anxiety: Victims often experience significant trauma, manifesting as anxiety, depression, or post-traumatic stress disorder (PTSD). The violation of privacy and trust can leave lasting scars on mental health.
- Shame and Guilt: Many feel responsible for their exploitation, leading to self-isolation and reluctance to seek help.
- Loss of Trust: Experiencing manipulation can severely affect a victim’s ability to trust others, including friends, family, and authority figures.
Social and Educational Impact
- Bullying and Social Stigma: Victims may face bullying or stigma if details of their exploitation become public, which can further isolate them and affect social interactions.
- Academic Performance: Emotional turmoil and stress can disrupt concentration and school performance.
Economic and Social Costs
- Costs for victims: Beyond the immediate financial loss from coerced payments, victims often face additional costs linked to mental health support, legal processes, and long-term recovery.
- Societal Costs: While specific dollar estimates for sextortion alone are unclear, the impact includes law enforcement resources, support services, and increased burden on financial sectors.[4]

Emerging Trends

With technology evolving, financial crimes affecting youth are also changing. Some emerging, often under-reported trends include:

Self-production of explicit content: Minors may be persuaded to create and share explicit material, sometimes receiving small payments from one or multiple offenders. The long-term risks are often misunderstood, making this a particularly insidious form of exploitation.
AI-generated material: Artificial intelligence can create hyper-realistic images that blur the line between real and fake, meaning a child could be extorted without ever having sent any material themselves.[5]

Industry and Regulatory Responses

Protecting youth against scams and financial crimes requires multiple coordinated approaches. Current efforts include:

Collaboration: Financial intelligence, law enforcement, and regulatory bodies increasingly work together to detect suspicious transaction flows linked to child exploitation. A key example is Operation Huntsman, where authorities targeted offshore sextortion networks and shut down over 1,000 associated bank and digital accounts.[6]
Public Awareness Campaigns: Ongoing education initiatives and public campaigns aim to inform young people, parents, and guardians about the risks of online exploitation and how to respond safely.
Financial institutions’ role: Monitoring transactions, submitting regulatory reports, and sharing intelligence allow financial institutions to detect, deter, and disrupt child exploitation. The detection of suspicious activity through financial flows, and the unique information financial institutions hold, is crucial and a clear regulatory expectation for reporting entities.
Safer online spaces: Greater focus on privacy safeguards, stronger identity verification, and abuse-resistant defaults can help protect young users. For example, social media platforms are implementing stricter age verification, default private settings for new accounts, and automatic detection of potentially harmful interactions, reducing opportunities for offenders to target minors.

Closing Thought

At the heart of these statistics are real young Australians whose lives have been touched by exploitation. Children aren’t vulnerable because they lack digital skills; they’re vulnerable because offenders know how to exploit those skills, and fear or stigma can make them hesitant to seek help. Awareness, education, and vigilance across communities, combined with preventative systems and safer online environments, remain our strongest ways to protect them and prevent harm before it happens.

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