As mobile phones become more and more widespread, consumers are being offered many new ways to pay for goods and services with mobile phones – everything from charges to credit and debit cards to charges that go directly to prepaid phone deposits and phone bills.

However, as mobile payments technologies and practices have evolved, U.S. laws have failed to catch up. The level of consumer protections that apply to your purchase will vary depending on which underlying method you link to your mobile phone.

Consumers Union has drafted a new article on mobile payments, available on the Social Science Research Network. The article recommends a few simple fixes to current U.S. laws that would ensure that all consumers making mobile payments have guaranteed consumer protections:

• Ensure that federal regulations are properly enforced to protect consumers who charge mobile payments to prepaid phone deposits. Clarify that prepaid phone deposits to wireless carriers are explicitly covered by federal regulations;

• Clarify federal regulations to ensure that consumers who charge mobile payments to phone bills have the same mandatory protections against unauthorized transactions and billing errors as consumers who use credit cards;

• Provide “chargeback” rights for payments linked to bank debit cards, prepaid cards and prepaid phone deposits. Amend federal regulations to include a right to reverse disputed charges where the goods and services are not as delivered or agreed upon, similar to the rights now provided to credit card or charge card users under the Fair Credit Billing Act;

• At the state level, protect all consumers who make “noncommunications-related” mobile payments charges to prepaid phone deposits or phone bills by passing legislation or adopting regulations that establish mandatory protections against unauthorized transactions, with a right of recredit, and a right to reverse disputed charges where the goods or services are not as delivered or agreed upon. These protections are already the law in California.

Until the law is changed to provide mandatory protections for all ways to pay by mobile phone, CU urges wireless carriers to provide these protections by contract

If you decide to use mobile payments technology, stay safe by following our consumer tips.

To learn more about mobile payments, click here.