On Friday the FTC issued a staff report titled “Paper, Plastic . . . or Mobile?: An FTC Workshop on Mobile Payments” addressing mobile payments and its effects on consumers and highlighting potential areas of concern. The staff report follows a workshop held last year on the same issues.
The report discusses the benefits that mobile payments offer consumers, including the ease and convenience of purchasing goods and services, the potential to lower transaction costs, and the ability to provide underserved communities with greater access to alternative payment systems. Despite the benefits, the report notes three primary areas of concern for consumers: dispute resolution, data security, and privacy.
The report urges companies both to develop clear policies on resolving disputes over unauthorized and fraudulent charges and to educate consumers about the same. Consumers fund mobile purchases through various sources—credit or debit card, bank account, or mobile phone account—that offer varying levels of protection, some statutory, some not. Thus, the report encourages, companies should develop these policies and convey them to consumers.
The report highlights special concerns regarding mobile carrier billing; currently, there are no federal statutory protections for disputes about unauthorized or fraudulent charges placed on mobile carrier bills. The report offers various consumer protection policies, including giving consumers the option to block all third-party charges and vetting third-party merchants upfront. The report notes that FTC staff is currently organizing a separate roundtable on the issue in May.
The report also discusses the security of sensitive financial information and points out that technological advances offer the potential for heightened data security in this context. The report identifies ways in which data can be kept secure, including the use of dynamic data utilization (so that, for each transaction, a unique set of payment information is generated) and encourages mobile payment providers to urge all companies in the mobile payment transaction to use strong security measures.
The report notes the privacy issues involved with mobile payments given the number of companies and the large amount of data involved. The report reinforces earlier suggestions that companies think about and address privacy at every stage of product development, allow consumers to make choices regarding data collection and use, and be transparent about data practices.
The report also briefly discusses international mobile payment issues and highlights a few examples of the work being conducted by governments and international organizations on consumer protection issues related to mobile payments.
The vote to issue the report was 4-0-1. Former Chairman Jon Leibowitz did not participate.