At last week’s ACI Emerging Payments Systems conference in Washington, DC, sponsored in part by Davis Wright Tremaine, federal and state regulators and industry participants discussed the myriad legal issues facing innovators and incumbent market participants offering new payment products and services to consumers, including prepaid products, mobile wallets, peer-to-peer (P2P) payments, virtual currencies and sophisticated consumer loyalty programs and advertising applications. Some of the highlights from the conference included:

  • A recurring topic throughout the conference involved the relevance of federal and state money transmitter laws to emerging payment services, particularly in California , where many start-ups are based. Government representatives from both civil and criminal enforcement agencies shared cautionary tales of both new and established companies that learned the hard way about the broad applicability of state money transmitter licensing laws, the Bank Secrecy Act, and related anti-money laundering regulations. Panelists reminded participants that “money transmission” is broadly defined to encompass any and all means of transmitting funds, with limited exceptions under various state and federal laws and regulations.
  • Privacy and consumer protection were also discussed at length. Companies were encouraged to adopt “privacy by design” and similar concepts when creating new products and services from the ground up, with consumer protection features and regulatory compliance plans built in. Several Federal Trade Commission personnel, in particular, underscored the importance of appropriate and adequate privacy and other disclosures to consumers in the mobile space and fundamental principles of fair and safe payment systems, citing to the FTC’s recent focus on mobile disclosures and efforts to update the older Dot Com Disclosures publication.
  • On the heels of several recent high-profile enforcement actions, a primary concern to panelists was maintaining appropriate supervision of third-party vendors throughout the product lifecycle. A particular focus included vendor compliance with state and federal laws and regulations and Unfair, Deceptive, and Abusive Acts and Practices (“UDAAP”) concerns.
  • Special emphasis was placed on the applicability of OFAC rules as well as emerging payment compliance issues in Europe and Latin America, areas that have seen much greater adoption of mobile payments among consumers than in the United States.