Learn more about the latest innovations in mobile banking and payment services - and why the government is worried about consumers.
Consumers report a growing interest in using smartphones to shop and manage their money – a trend that worried the Federal Trade Commission, the nation’s consumer protection agency.
In a related trend, e-commerce accounts for a growing share of retail sales.
Mobile financial services offer a convenient way to pay bills, access account information and go shopping, but the relatively young technologies also raise numerous questions about security, privacy and complaint resolution, according to a report released by the FTC today.
Not to be left behind, Millionaire investors are adopting mobile banking technologies.
Why is the FTC so worried? The agency, which has been tracking the development of mobile financial services for more than a decade, warns of potential problems with security, privacy and complaint resolution. Here’s an overview:
· Resolution of Disputes: Consumers making mobile payments may not be protected against unauthorized charges, according to the FTC. Protections vary by the type of account – credit card, prepaid card or mobile carrier billing – used in the transaction. The agency warns that consumers disputing fraudulent payments made via mobile phone billing are unprotected by any federal rules or regulations.
· Security: Concerns over stolen information is the main deterrent to using mobile payment systems, according to the FTC. More than 40 percent of consumers worry their financial information could be stolen in the process of making mobile transactions – apparently with reason. “Consumers may be harmed when less responsible companies use insecure methods to collect and store payment information,” the agency states. Consumers are advised to take matters into their own hands by setting up password protections to unlock their phones, and established a second password for any payment apps. In the case of theft, consumers can ask their mobile carrier to disable the phone and payment apps.
· Privacy: Mobile payment systems involve a large network of service providers including banks, merchants, operating systems manufacturers, hardware manufacturers, mobile phone carriers, app developers, and coupon and loyalty program administrations. According to the FTC, “Mobile payments can allow multiple players within the mobile payments ecosystem to gather and consolidate personal and purchase data in a way that was not possible under the traditional payments regime.”