Published: September 2014

Mobile banking: Convenient, but is it safe?

In response to the Consumer Financial Protection Bureau's request for information on mobile banking services, Consumer Action and other privacy advocates highlighted issues of concern that should be addressed in light of these emerging financial services. Federal regulators can help both consumers and the mobile banking industry by establishing strong minimum standards that protect consumers' finances and privacy. The industry should welcome thoughtful regulation to help bring consumer protections into the modern world to protect emerging payment systems.

The mobile banking arena is forever changing the way consumers live their daily lives. Services like Western Union and PayPal have been replaced with Google Wallet and Apple Pay, yet federal regulators have not been as quick to adapt to this new technology. While mobile banking and similar financial innovations have opened up financial services and internet shopping to those consumers who do not have traditional computer access, there are also gaps in consumer protection laws that do not address potentially crippling problems, like identity theft and credit card fraud.

“In a world where people can manage their money on the go, there is great potential to serve more consumers and allow them to take greater control of their finances,” Consumer Financial Protection Bureau Director Richard Cordray said in a statement. “But we need to make sure all consumers are protected whether they are opening their wallets or scanning the screen on their smartphones.”

The mobile payments industry will benefit if consumers are assured that systems are safe, fair and honest. Voluntary measures are important, and many in industry are working hard to build in consumer protections. But voluntary measures cannot give consumers the assurances they need or protect the good industry players from the scandals that will taint the entire sector if things go wrong. Regulators can help both consumers and industry by leveling the playing field and establishing strong minimum standards in areas like ensuring access to funds, fee regulations, privacy and parental notification. The industry should welcome thoughtful regulation to help bring consumer protections into the modern world to protect emerging payment systems.

 

Other Organizations

National Consumer Law Center (on behalf of its low-income clients) | California Asset Building Coalition | California Reinvestment Coalition | Consumer Action | Consumer Federation of America | National Association of Consumer Advocates

More Information

For more information, please read the coaltion's letter to the CFPB.

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