US: FTC mobile payments report will have impact on social-media-based offerings

There has been an explosion in the number and variety of mobile payments services available to consumers in the last couple of years, including several social-media-centric payments innovations. New payments products, including peer-to-peer services, mobile coupons, contactless options and mobile wallets, offer consumers and businesses significant flexibility and many new benefits. But regulators are concerned about the prospect of increased risks to consumers. The release of the Federal Trade Commission’s (FTC’s) 8 March 2013 staff report, ‘Paper, Plastic… or Mobile? An FTC Workshop on Mobile Payments’, indicates the potential for new and greater regulatory scrutiny of this growing sector. The report discusses the key issues facing businesses and consumers in emerging mobile payments services and highlights the diverse mix of companies comprising the mobile payments ecosystem, including mobile carriers, payment card networks, financial institutions, merchants and others. It describes three primary evolving concerns, all of which are relevant to social-media-based offerings: data security; privacy; and dispute resolution.

The report — which follows up on a 2012 FTC workshop on the same topic — is a reminder to businesses developing or deploying mobile payments services, and the third parties with whom they share consumer data, that the FTC is continuing to monitor the industry and stands ready to enforce the law against deceptive or unfair practices. The FTC stakes out a claim for broad authority over mobile payments, asserting that it has jurisdiction over mobile phone carriers for non-common carrier activities (e.g. mobile carrier billing) and every other type of company involved in mobile payments except for depository institutions. Therefore, businesses in the mobile payments ecosystem — including social media platform providers, app developers and advertising networks — should assess their existing data privacy and security practices and other terms and conditions of service to ensure that they are consistent with evolving practices…

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