While the mobile commerce segment burns red hot, consumer protection groups warn of the potential security risks associated with using your mobile device as a payment method.
Consumer’s Union, the nonprofit testing and information organization which publishes Consumer Reports, called on regulators Tuesday to implement protective standards on mobile payments, and to educate consumers of the liabilities in using mobile payments as opposed to highly regulated traditional credit and debit cards.
Federal law currently protects credit or debit card holders from many charges associated with lost, stolen or misused cards, for example, but without industry-wide rules for mobile commerce providers, consumers could risk losing money through fraud, merchant disputes or processing mistakes, the group said.
The risks vary depending on how mobile payments are executed. Those linked to credit cards are the most protected, according to the group, with limited liability for unauthorized transactions and the right to argue about certain charges. Phone purchases hooked up to debit cards have fewer safeguards and carrier-billing is even less protected. Until the same standards of traditional commerce enter the mobile realm, consumers will remain weary of the concept.
