When Farmville Leads To Fraudville

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Friday, July 8th, 2011

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With the news that Ebay paid $240 million dollars in cash for Zong, a mobile payments provider, the web is popping with mobile pay news. Apparently, it looks like we are all going to be paying for things with our phones tomorrow. Wallets will be obsolete, and plastic cards will only gather dust!

Now, you may already be using mobile payments and not even realizing it. 148 million consumers in 166 countries play Zynga’s games like Texas Hold Em, Frontierville, and Mafia Wars monthly. There are over 55,000,000 Farmville players just in the U.S. All those players helped generate Zynga’s revenue of $597.5 million in 2010 and $235.4 million in the first quarter of 2011. If you’re making purchases on your phone while playing, then you’re making mobile payments, alright.

Consumers are buying a lot imaginary cows and farmland that need tendin’ to. But how are people paying for these virtual products? And are you protected against fraud and mistakes made by Zynga, or ATT, or whoever your wireless carrier may be?

Many consumers are using their mobile devices to play and pay for Zynga’s games. If they back up their purchases with their credit cards, this grants them the same consumer protections they would get with any other credit card purchases – things like guaranteed protections against fraud and errors, and the right to reverse disputed charges on your credit card bill.

Some may be using their debit cards to back up their mobile payments, which gives them some, but fewer protections. With debit cards, you get guaranteed protections against fraud and errors but you can’t reverse a disputed transaction the way you can with a credit card. You have to pay it first, and then your bank will recredit the missing funds to your account within 10 business days while it investigates the problem.

But if you are using your mobile device to pay for things, and you fund the payments with a prepaid or gift card, you are guaranteed no protections under law. If you link the payment directly to your phone account, it’s unclear whether you get any legal protections. All you get under these circumstances is what is in your mobile phone contract, and that isn’t much. Check out our report on DefendYourDollars.org outlining the problems with mobile contracts and the lack of guaranteed protections for consumers who make payments with their mobile phones.

We wrote to 18 major wireless companies asking them to include these basic protections for you in your contract. Not surprisingly, we didn’t get much of a response.

So we are asking you, their customers, to write to the CEOs of the major wireless companies and tell them that you want baseline consumer protections in your mobile contract for all ways to pay by mobile phone. Click here to send them a message now.

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