Shoppers who use their mobile phones to pay for products need more protection than they're currently getting from wireless carriers, according to a leading consumer protection group.
Mobile payments should have the same protections as credit and debit card transactions, according to Consumers Union, the advocacy arm of Consumer Reports, in an analysis released Wednesday.
After reviewing the policies of the big wireless carriers, the organization concluded that the carriers need to strengthen their agreements with their customers to protect them if a phone is lost or stolen, a merchant makes a billing mistake, or a purchase is unsatisfactory.
"We found that consumer rights can vary widely between wireless carriers, and the protections carriers claim to provide are often nowhere to be found in customer contracts," said Consumer Union Senior Attorney Michelle Jun. "As new mobile payment options become available, consumers are better off sticking to services linked to credit cards or debit cards, which come with strong protections required by law."
Here's what Consumers Union found out about the protections offered by carriers:
- Lost or Stolen Phone. Verizon customers aren't liable for charges rung up on a lost or stolen phone. Sprint, AT&T, and T-Mobile customers aren't liable for fraudulent charges after they report a phone has been lost or stolen. So a customer could be on the hook for fraudulent charges made before a phone is reported missing.
- Disputed Charges. Although all the carriers claim they will provide refunds for billing errors and unsatisfactory purchases, there's nothing in their customer agreements to support that, the Union said.
- Refunds for Pre-Paid Customers. AT&T, Sprint and T-Mobile say refunds to pre-paid customers for fraudulent charges will be made "promptly," but there's no definition of "promptly" in the contracts. The Union contends customers should receive a provisional credit to their account within 10 days for any fraudulent charges they report to their carrier. Fraudulent mobile payments made on pre-paid customers' phones aren't a problem for Verizon because its pre-paid customers aren't allowed to make mobile payments with their phones.
- Right to Withhold Payments. Customers don't have to pay disputed charges to Sprint, as long as they're reported within 60 days. Both AT&T and T-Mobile allow customers to withhold payment of disputed charges while an investigation is conducted of the dispute, but it only discloses that right to California customers. Verizon lets customers withhold payment for disputed charges connected to a stolen or lost phone, but not for other kinds of challenged charges.
- Mobile Payment Caps. All carriers cap the amount that can be spent from a phone line on mobile payments. AT&T's limit is $100. Verizon and Sprint's is $25. AT&T also has a set-your-own limit option, but it costs $4.99 a month to use it.
While technology firms, like Google, and credit companies, like Visa and MasterCard, have been hot to get the mobile payment space cooking, retailers have shown tepid enthusiasm for the idea. Without better protections, Consumers Unions argues, consumers should be cautious about the practice, too,