Consumer Protection in Mobile Payments: Shared Concerns of Enforcement Agencies

ICPEN Member and Partner agencies are increasingly seeing consumers use mobile payments. These payment mechanisms take many forms and can vary from country to country. They offer consumers ease and convenience, and show exciting potential for mobile users and developers.

On the other hand, mobile payments also raise consumer protection concerns in a rapidly changing technological environment. We are concerned about the potential for the misuse of these systems to commit fraud or deception. We are also concerned about what protections are in place to protect consumers against misleading and unfair practices and transactions which go wrong.

Regardless of the technology used in a payments system, consumers should enjoy a high level of protection. In order to ensure a beneficial development of new payment systems, care should be taken to avoid consumer detriment and ensure consumer confidence in mobile payment systems. In this effort, appropriate regard should be given to consumers who may be vulnerable or disadvantaged due to their age, experience, or digital literacy.

The ICPEN Report on Mobile Payments describes lessons learned and practical experiences with the growing use of mobile payments. It illustrates that despite the differences in our regulatory and legal systems, and the way we handle mobile payments issues, ICPEN consumer protection authorities share some common concerns.

Experience so far with mobile payments, and the risks that consumers face, suggest that policymakers and stakeholders should carefully consider how to address the following issues:

1. The level of security provided. Data security safeguards and security mechanisms for transaction authorisation, including payer authentication, are critical to prevent misuse and unauthorised charges. Insufficient security and protection measures may lead to mobile payment systems being misused to facilitate fraud or deception.
2. The extent of liability for unauthorized and disputed transactions. Various protections and redress mechanisms are in place in ICPEN member and partner countries, depending on payment method and local legal requirements. New payment mechanisms raise questions about how these existing legal protections may apply, and the extent to which new payment mechanisms raise different or additional consumer protection concerns. Consumers should nevertheless not be liable for unauthorised transactions made possible by shortcomings in security and the failure of protective features of any payments system.
3. Material information disclosures. Providing key information about the mobile payment transaction, including terms, fees, and other conditions can help consumers protect themselves. In order to be useful, such information should be given clearly and conspicuously prior to purchase, with due regard for accessibility on handheld devices.
4. Clear information about how consumers can obtain redress. There can be many parties to a mobile payment transaction: mobile network operators, financial institutions, other payment system providers, app developers, and providers of goods or services. It is not always clear, either in the law or in the information available to consumers, who are the parties in the transaction. Consumers should be clearly informed of how and to whom they can report problems with transactions in order to obtain redress.

In addition to the above, the Members and Partners of ICPEN encourage policymakers and stakeholders to pay attention to the principles contained in the OECD’s Policy Guidance on Consumer Protection and Empowerment in Online and Mobile Payments for guidance regarding these topics.