Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC staff provides comments to CFPB on mobile financial services, (Sep 12, 2014)

By John W. Arden, J.D., LL.M.

In response to the Consumer Financial Protection Bureau’s request for information on the use of mobile financial systems by consumers, the FTC staff filed a comment, highlighting five consumer protection issues and the steps taken by the FTC to address them.

Highlighted issues included: (1) the potential liability for unauthorized charges using prepaid or stored-value products; (2) unfair billing practices on mobile carrier bills; (3) the privacy of consumers’ personal and financial data; (4) the security of consumers’ personal and financial data; and (5) the potential use of consumers’ information by data brokers and other third parties.

With regard to the potential liability for unauthorized charges on prepaid or strored-value products, the FTC staff has encouraged consumers to look for mobile payment services that disclose upfront how the payment system works and what consumers can do if they encounter a problem. The staff also has recommended that companies provide clear dispute resolution and liability limits information to their customers.

On the issue of unfair billing practices on mobile carrier bills, the FTC has engaged in policy and outreach initiatives to address mobile cramming issues and has issued a report recommending best practices for industry participants to protect consumers against such cramming, the comment indicated.

The Commission has addressed the privacy concerns raised by the rapid expansion of mobile technologies by urging companies to adopt “privacy by design” at every stage of product development; to offer more streamlined choices to consumers; and to make information collection and use practices more transparent. Moreover, the FTC has brought a number of enforcement actions alleging deceptive and unfair conduct by mobile app developers in the collection or sharing of consumers’ data, including children’s data.

Security concerns regarding consumers’ personal and financial data have been the subject of FTC enforcement, policy initiatives, and consumer and business education, the FTC staff reports. The Commission has brought recent cases against Fandango and Credit Karma and has released educational materials discuss how such apps may fail to provide security for consumer data. It also hosted a workshop on mobile security threats.

Concerns about the potential use of consumer information by data brokers and others have been behind FTC actions against a number of mobile apps under the Fair Credit Reporting Act, according to staff. The Commission has issued a reporting detailing an in-depth study of practices of nine data brokers (“Data Brokers: A Call for Transparency and Accountability”) and will host a public workshop on September 15 (“Big Data: A Tool for Inclusion or Exclusion?”) to examine the use of big data and its impact on consumers.

News: ConsumerProtection Privacy FederalTradeCommissionNews