Are you worried about what your kids are exposing on social networking websites? Maybe you should be. A colleague recently checked on her teenage son's Bebo site and found it included a gallery of photographs of girls of his own age. Some were in their underwear and at least one appeared to be naked. A report from Ofcom out yesterday estimates that 49% of British eight to 17-year-olds have their profile posted on networking sites such as Bebo, MySpace or Facebook, including a quarter of eight to 11-year-olds, even though they are officially closed to pre-teens. Nearly half of youngsters say their parents set no rules for how they use these sites and many have set their profiles so that anyone anywhere can access their images and details.

Tomorrow the Home Office will publish guidelines about social networking. Crystal balls are unnecessary to predict what they will say. The emphasis will be on self-regulation - a pragmatic admission of the impossibility of properly policing the web, especially social networking, which is largely US-based. Parents will be told to apply "normal parenting standards" to what their offspring are doing online. Hang on. How can normal parenting standards apply to an area of life where I have the equivalent of a foundation-level Standard Grade to my teenage son's PhD? Until yesterday, I'd never heard of "privacy settings" and when I coyly raised the issue, the kids gave me a comforting pat and told me not to be "overly neurotic".

There's the rub. My generation thinks we're smart because we e-mail each other and book holidays online, but social networking exposes the real digital divide. To my untutored eye, it looks like the Wild West - full of latter-day snakeoil salesmen, bandits and worse.

It's a view shared by Dr Murakami Wood of Newcastle University, who says: "The current social networking generation is very knowledgeable and ahead of the game in terms of technology, yet very naive." For example, it's a simple fact that where children go, sex offenders will follow, whether it's the fairground or Facebook. A recent US report claims that 29,000 sex offenders have been found stalking round MySpace and they're only the ones that aren't hiding behind pseudonyms. Add to that a recent MTV study suggesting the typical British youngster has 16 online "friends" that they have never met.

Social networking has been a hugely positive force in the lives of my children. As pupils of a high school with an enormous rural catchment area, it has been a godsend for socialising online with classmates and has probably saved us a fortune in phone bills and petrol. Gap years gave the girls huge and fascinating global networks of friends. "Thanks to Facebook, I talk to friends in Israel, Kenya, South Africa, Australia and New Zealand every few days. Without it, I would never be able to keep up these friendships," the 19-year-old said yesterday. And their university social lives are dependent on Facebook local networks. In short, they could not imagine life without it.

However, here are a few scary stories that should give us all pause for thought. On the Aberdeen Facebook student network, there's a girl called Sophia. She looks more like a top model than a student and nobody seems to know who she is, yet according to my daughter "everyone is friends' with her". This disturbing oxymoron doesn't seem at all odd to her, though she admits she suspects Sophia isn't who she pretends to be and may be a male stalker.

The other daughter recently discovered her own image on a number of sites belonging to people she has never heard of, all listing her as a "friend". As she only shares images and information with people she knows, she concludes that these people must be (at best) friends of friends. This may be the result of an absurd numbers game in which the vain and vacuous bulk out their friends to as many as 5000, as if this was a measure of their popularity.

Harmless? An Edinburgh student was recently approached by a complete stranger who reeled off minute details about every aspect of her life. Another found her photo gallery and entire identity had been assumed by another Bebo user. With "friends" like these, who needs enemies? From the perspective of someone born in the 1950s, users of these sites are incredibly lax about their privacy. Today's 20-year-olds who grew up with social networking seem barely to distinguish between offline and online relationships, even when one is reality and the other may be pure fantasy. One suspects the founder of Facebook, Mark Zuckerberg, would find the distinction irrelevant. That is why the owners of social networks display remarkable hubris when critics raise issues of privacy and integrity.

Try deciphering the smallprint of privacy agreements and you may find them somewhat cryptic. Facebook, for example, warns: "We collect this information your personal profile and all activity on your site so that we can provide you the service and offer personalised features." Zuckerberg talks about "helping people share information with their friends about things they do on the web". This translates as corporate advertising, the great golden goose for social networking companies.

Last month the inventor of the web, Sir Tim Berners-Lee, warned that people were giving away too much private information online. Dr Wood, managing editor of the journal Surveillance and Society, agrees. "There is huge potential for unwanted surveillance over social networks and people are deliberately exposing themselves to this." Recently, Facebook was forced to apologise for adding an application called Beacon, an advertising programme that notified users that one of their friends had made a certain purchase online. The application has been changed from "opt-out" to "opt-in" after 46,000 complaints. But this is the direction social networks are heading, because it will make their owners incredibly rich. (Microsoft recently bought a small share in Facebook that valued it at $15bn.) The future is about making money out of friendship. This isn't about the multinationals sneaking into our lives. It's about our kids leaving the door wide open with "welcome" written on the mat.

"Data mining" is a rapidly growing business. There ought to be much more concern about what may happen to this material. Endless bombardment with tailor-made adverts is the least of it. In 10 years, when our offspring have long forgotten about their undergraduate hi-jinks, they could come back to haunt them, as employers use data-mining companies to bore down beneath the surface of an applicant's CV. Did I say in a decade?

Yesterday, a friend told me of someone she knows who runs a law firm. He used Facebook to check on someone he was thinking of recruiting and found a couple of oblique references to snorting cocaine. He decided not to offer him the job. The same guy may one day find it hard to get health insurance. By that time he will have long ago cancelled his Facebook profile, but it doesn't matter because the material will have been endlessly replicated by his "friends".

If you're my real friend, I'll see you in a coffee shop, but don't look for me in cyberspace.