Services like Google Wallet, PayPal, and the new Apple Pay offer consumers the convenience of storing their credit card and bank information in their smartphones and tablets for easy payments, transfers and transactions. However, a wide rash of data theft and credit card fraud in the last year has made folks wary of where their personal information could wind up.
The Center for Digital Democracy (CDD) and United States Public Interest Research Group (U.S. PIRG) have asked the Consumer Financial Protection Bureau (CFPB) to set forth rules that protect consumers when they use any type of mobile financial services.
CDDD and U.S. PIRG claim that people are at risk from predatory lenders and fraudsters when they upload their information to their phones or tablets. They are asking for safeguards to be put in place on data collection, marketing, mobile payments, financial apps, and other services that could expose consumers’ private payment information to groups with nefarious purposes.
Action needs to be taken fast, say public interest groups
Ed Mierzwinski, consumer program director for U.S. PIRG, said the CFPB needs to act sooner, rather than later, to avoid putting folks at risk. "The CFPB has a short window to ensure that the public receives the necessary consumer safeguards, especially for financial applications and their privacy, as they increasingly rely on mobile devices for banking, payments, credit applications, shopping, e-commerce, and other services," he explained. "Otherwise, unfair business practices will become entrenched in the marketplace and hard to stop."
The two public interest groups are asking the CFPB to regulate the following worrisome activities:
- Data collection and consumer profiling
- Location-based services showing where people are in real-time
- Apps designed to influence consumer behavior and trigger spending
- Targeting of certain demographics and cultural groups
- Data theft for the purpose of selling to marketing lists
- Invasion of privacy
- Targeting consumers with payday loans and other predatory financial products
The director of the CDD questioned whether the capabilities of these new mobile financial products would outweigh the security concerns, long-term. “Economically vulnerable consumers—or any other American on a budget—could be bombarded with highly sophisticated offers urging them to spend that take advantage of their data, buying habits, family composition, ethnicity and more,” said Jeff Chester. He says the CFPB needs to put “fair rules” in place to protect people.
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