Feeds

Consumers Union calls for NFC regulation

Network operators can't be trusted, not like banks

The Power of One Infographic

As America wakes up to the idea of pay-by-phone the Consumers Union is calling for greater regulation, concerned that proximity payments may not receive any protection at all.

Various pay-by-phone operations, based on Near Field Communications technology, are being tested in the US at the moment, with a consortium of US network operators committed to creating an interoperable system. But the Consumers Union reckons that such payments need to be as protected as debit cards, at the very least.

The problem is that while credit cards come with a $50 limit on customer liability - and even users of debit cards risk a maximum of $500 - the kind of pre-payment mechanisms proposed by the current crop of proximity payment systems offer no protection to the customer at all.

That might not matter when you load up your phone with $25 and pay for a cup of coffee or two - if you end up in dispute with the coffee shop you can just take your custom elsewhere or badmouth the place on Yelp. But if pay-by-phone goes mainstream then there could be a lot more money changing hands with users unaware of the risks they are taking.

Should you find yourself in dispute with an internet retailer then threatening to take the matter to your credit card company is remarkably effective - the credit card will refund your money and take over the dispute, though the retailer will generally capitulate before that happens. Debit cards aren't quite so effective in such circumstances, but users are generally familiar with their limitations.

Equally well protected are direct fund transfers, direct debits as we know them here in the UK. The smallest disagreement over a direct debit results in an instant refund, with the parties left to argue it out later.

The complete opposite applies in the case of pre-payment systems, under which the consumer has no more protection than would apply if they had paid cash - once the (virtual) money is in the merchant's (virtual) hands then it can't be easily retrieved.

The Consumers Union points out that it's not clear which of these mechanisms will apply to proximity payment systems, but that imposing some rules would be an ideal start for the new-fangled Consumer Financial Protection Bureau that got voted into being last month. It might seem overkill for the price of a cup of coffee, but there is an argument for sorting out the regulation before it becomes a bigger issue. ®

The Essential Guide to IT Transformation

More from The Register

next story
Major problems beset UK ISP filth filters: But it's OK, nobody uses them
It's almost as though pr0n was actually rather popular
Apple orders huge MOUNTAIN of 80 MILLION 'Air' iPhone 6s
Bigger, harder trouser bulges foretold for fanbois
Google Nest, ARM, Samsung pull out Thread to strangle ZigBee
But there's a flaw in Google's IP-based IoT system
Orange spent weekend spamming customers with TXTs
Zero, not infinity, is the Magic Number customers want
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
'Two-speed internet' storm turns FCC.gov into zero-speed website
Deadline for comments on net neutrality shake-up extended to Friday
Oh girl, you jus' didn't: Level 3 slaps Verizon in Netflix throttle blowup
Just hook us up to more 10Gbps ports, backbone biz yells in tit-for-tat spat
Want to beat Verizon's slow Netflix? Get a VPN
Exec finds stream speed climbs when smuggled out
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.