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Debt Slavery has a Cute New Name: Kwedit

A service which allows users to pay later for what they want to do online now. What’s wrong with that? If you don’t have a credit card, bank account or other means to facilitate your online transactions, why should you be barred from the world of commerce, especially when it is all that stands between you and powering up in you favorite online game or from buying your Foo Pet a new diamond necklace? HUH?

Ever since I read about the new services of Kwedit in the New York Times this past February, I have wanted to write about it. What is most troubling about the company is that it is so clearly aimed at the most vulnerable and gullible market on the planet: North American kids.

It is not merely that Kwedit targets kids that makes it an object of concern, but the way it connects emerging markets in “virtual goods” with real world debt. For some time now, adult online worlds like Second Life have been offering and making money from the purchase of virtual currency for real money. This allows users to transact commercially with each other within the online virtual world. Strange, but whatever, there are plenty of stranger things that consenting adults want to do.

On March 2nd, Steven Colbert skewered the premise of Kwedit in a segment called The Word on his show (US viewers can see the clip here, Canadian viewers click here). He especially ridicules the company’s incredible deflection of the charge that they take advantage of children by arguing that in fact they are providing “teaching moments” that allow adults to educate children about credit. This is a tactic the company exercises at great length in a post to the Kwedit blog.

The core of the company’s defense of its mission and the Kwedit Promise product in particular is that they do not offer this service to children, but only to teenagers (13 or older) and adults. The claim, deftly stated as if it were a chartered public service offering, is that Kwedit’s goal is “to let people pay for on-line purchases without requiring them to obtain a credit or debit card.” The company blog goes on to make the point that Kwedit does not offer credit services or loans, but is merely a payments company which ” facilitate(s) payments for people who want to make on-line payments with cash, and we try to make that as easy as possible.” Funny then, that they should choose to name such a company with a cutesy word that sounds so remarkably similar to the way a child with a cute lisp might say the word “credit”, but I am sure that is just a crazy example of serendipity.

The thing that I am particularly sensitive to is the corruption of childhood by commerce. Never mind the defense that the children concerned here are 13-18 years old. For openers, one of Kwedit’s gaming client/partners is a site called Foo Pets. Go take a look and tell me whether you think its users are primarily 13 years and older. Of course, Kwedit may be strictly speaking honest when they say they are not transacting with younger children, but it is pure fiction that this means that they cannot be customers, in effect.

Kwedit’s defense of their business model and practices is so well written that it tempts one to give them a little rope and take them at their word that what this business is really about is creating a way for people to use cash on the web. There are certainly plenty of people and places for whom that would be an enabling technology solution, without a doubt. It that really what Kwedit is aiming at? I’ll let you judge for yourself.

Maybe Kwedit CEO Danny Shader is being honest in his long post about what Kwedit is and isn’t, what it intends and doesn’t intend, but the lengths to which he goes to convince us of this in the last four paragraphs of this post make it sound as if he’s started a social mission organization. Smells like duckshit to me.

Maybe I have a hard time accepting a financial institution with cuddly cuteness. But I would point out that the fact that Kwedit neither makes loans nor offers credit plays a bit fast and loose with the truth. Fact is it offers a mechanism that enables me to promise to pay for something in the future, never mind the argument that it is bound to this fiction because the Internet doesn’t take cash. The strange loop that allows kids to buy stuff and then use the Kwedit product Pass the Duck (really, is there no end to the use of cuteness to mask dubious financial propositions?) to “ask” their parents or some qualified payor to discharge the cash debt (or should I say, what, financial obligation or just Quacks, Mr. Shader?) is worthy of George Orwell.

Regardless of the status of Steven Colbert’s satire and Danny Shader’s sincerity, we should be paying attention to the introduction of a new world order of financial services. As we continue to marvel over the hubris of investment banking’s hall of mirrors, we ought be particularly careful of financial institutions wearing duck’s clothing: ’cause you know what they say…if it walk like a duck and talks like a duck, than it just might be a snake in the grass!