* FTC says users should be able to block 3rd-party charges
* Data collection should be acknowledged--FTC
* Entire payment chain should be encrypted--FTC
WASHINGTON, March 8 Fast, efficient mobile
payments could be a huge boon to business but companies must
ensure customer data is safe and provide users with recourse in
case of fraudulent or incorrect billing, the Federal Trade
Commission said in a report on Friday.
The commission also urged every company in the mobile
payment chain to track payments so customers know who to contact
if there is an error; to tell customers what data is collected
and why; and allow customers to block all third-party charges.
As the world goes increasingly mobile, payment companies are
getting into the act. Mobile service providers allow consumers
to put charges on mobile bills while credit card companies like
MasterCard are moving toward offering a digital payment
Google has also moved the mobile payment space with
its "wallet" offering.
This lays the groundwork for a huge increase in mobile
payments but that growth could lag because 42 percent of people
surveyed cited security as the primary reason that they refrain
from making mobile payments.
To allay these and other concerns, the FTC recommended that
mobile payment service providers clearly convey to customers
what they can and cannot do in terms of removing incorrect
For example, charges placed on credit cards would be
protected in the same way that charges made with plastic are
protected. But other mobile payments, such as those based on
preloaded debit cards, may not.
"Companies should develop clear policies regarding
fraudulent and unauthorized charges and clearly convey these
policies to consumers," the FTC said in its 17-page report.
The FTC also urged every company in the mobile payment chain
to track payments in order to make it easier for consumers to
fight back if they find unauthorized charges like music
downloads, voicemail, ringtones and online news "crammed" onto
their mobile bill.
"Cramming" costs consumers $2 billion a year, according to a
Senate inquiry completed in 2011.
Mobile carriers should be able to allow consumers to block
all third-party charges and explain how to dispute unauthorized
charges, the FTC said in its report.
The FTC also urged all companies in the mobile data chain --
from app sellers to telecommunications companies -- to encrypt
the entire payment chain and take other steps to ensure that
consumers' data cannot be hacked and used to steal from them.
"The reputation of the industry as a whole may suffer if
consumers believe lax security practices are the norm," the FTC
The FTC urged companies offering mobile payments to tell
consumers what data is being collected and how it is being used.
"Companies should provide reasonable security for consumer
data and should limit data collection to that which is
consistent with the context of a consumer's interaction with
that company," the report said.