Mobile Financial Services Show Promise, But Consumers Need To Be Assured Of Protections, CU Says In Comments
By Consumers Union on Monday, September 15th, 2014
Mobile financial services may provide consumers lower-cost, more convenient ways to manage their money but lawmakers, industry and regulators need to step-up to ensure adequate consumer protections, we told the Consumer Financial Protection Bureau (CFPB) in response to the CFPB’s Request for Information Regarding the Use of Mobile Financial Services by Consumers and Its Potential for Improving the Financial Lives of Economically Vulnerable Consumers.
Consumers use mobile financial services that roughly fall into three categories, with some overlap: mobile money management, mobile transaction accounts, and mobile payments. Mobile money management tools, such as alerts when a bill is due, help consumers stay on top of their finances. Both banks and non-banks sell mobile-enabled transaction accounts, and many of these products serve the same functions as bank accounts. Mobile payments allow consumers to pay bills, remit money overseas, transfer money peer to peer (P2P), or make purchases using a mobile device.
While mobile financial services technologies may provide consumers a measure of convenience and control that they might not otherwise have, those benefits may come at a cost. As our research has shown, with some of these products and services, consumer protections may be lacking. Vulnerable consumers may be at particular risk. Our comments therefore recommend that consumers be assured of the following baseline protections when using mobile financial services:
- Mobile money management tools should be transparent, easy to understand and use, and any fees associated with their use fully disclosed;
- All mobile-enabled transaction accounts, whether provided by banks or not, should have the same basic consumer protections, including deposit insurance and rights under the Electronic Fund Transfer Act;
- Mobile payments should have strong, consistent consumer protections. Whether consumers link their mobile payments to credit cards, debit cards, prepaid cards, or gift cards, or bill directly to their mobile phone accounts, consumers should have guaranteed protections against losing their money if their mobile device is lost or stolen, used to make unauthorized payments, or for other erroneous charges due to fraud or mistake;
We also asked the CFPB to ensure that the rise of mobile financial services does not relegate consumers who cannot or choose not to use mobile financial services to second class status. Read the full comments here.
Have you used mobile financial services? We want to hear from you. Please respond in the comments.