CU calls for protections in contactless cards and pay by cell phone

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June 20, 2008
Donald S. Clark
Secretary
Federal Trade Commission
Room H-135 (Annex N)
600 Pennsylvania Avenue NW
Washington, DC 20580
RE: Pay on the Go – Comments, Project No. P059106
Dear Mr. Clark:
The Consumer Federation of America (CFA), an association of more than 300 nonprofit consumer organizations, has since 1968 sought to advance the consumer interest through research, education, and advocacy. Consumer Action (CA), founded in 1971, is a nonprofit organization that advocates for consumers and provides consumer education through its extensive network of community organizations. Consumers Union (CU) is a nonprofit membership organization chartered in 1936 under the laws of the State of New York to provide consumers with information, education and counsel about goods, services, health, and personal finance. CU’s income is solely derived from the sale of Consumer Reports, its other publications and from noncommercial contributions, grants and fees. In addition to reports on CU’s own product testing, Consumer Reports, with approximately 5.8 million paid circulation, regularly carries articles on health, product safety, marketplace economics and legislative, judicial and regulatory actions that affect consumer welfare. CU’s publications carry no advertising and receive no commercial support.
We are pleased that the Federal Trade Commission (FTC) is exploring the consumer protection policy issues related to contactless payment systems. This is an area of growing concern, especially as payments and mobile communications are poised to converge. As is often the case, law and public policy have not kept up with innovations in technology and business to ensure that consumers can enjoy the benefits of contactless payment with the confidence that they have strong legal protections should problems arise.
We believe that contactless payments can potentially provide many benefits to consumers, including:
• making some transactions quicker;
• obviating the need to carry cash or have the correct change for a transaction;
• storing coupons and gift certificates in electronic form for use at the point of sale, in place of paper versions that are easily lost or forgotten;
• helping consumers keep track of expenditures and receipts.
But there are also privacy, security, and other consumer protection issues. The FTC’s request for comments and the “Town Hall” that the agency will hold on July 24, 2008 on contactless payments provide good opportunities to highlight these issues and discuss how to address them. In these comments, we will briefly describe some of the main issues from the consumer perspective.
For the full comments, click here.