PhotoMost cell phone and tablet users can purchase digital goods and charge them to their monthly bill or prepaid phone account. But they may not get the protections they need to limit their financial liability if something goes wrong with the transaction.

The protections consumers receive will vary depending on their wireless carrier's policies and what's in their cell phone contract, according to a new analysis by Consumers Union.

"Consumers using mobile payments should get the same strong protections they currently enjoy when they make purchases with a credit card or debit card," said Michelle Jun, senior attorney for Consumers Union, the nonprofit advocacy arm of Consumer Reports. "But 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."

In May 2011, Consumers Union called on the top wireless carriers to strengthen their contracts to protect consumers in the event that their phone is lost or stolen or if a merchant makes a billing mistake or the customer is not satisfied with a purchase. The consumer group urged the carriers to provide the same strong protections guaranteed by law when consumers use a credit card or debit card.

In addition, Consumers Union pressed the companies to provide consumers across the country with the same protections California phone customers are entitled to receive as a result of regulations issued by the state's Public Utilities Commission (PUC).

Carriers say it's adequate

Since May, Consumers Union has been in communication with representatives from AT&T, Sprint, T-Mobile, and Verizon Wireless to find out how they handle disputed mobile payment transactions. All four carriers maintain that they provide ample protections for consumers.

However, Consumers Union found that the protections these carriers provide fall short of what consumers get when they use credit cards and debit cards or when California consumers report a disputed charge on their phone accounts. In addition, many of the protections that wireless carrier representatives described to Consumers Union are not disclosed in customer contracts, making it difficult to know whether consumers can count on these safeguards when problems arise.

"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," said Jun. "If wireless carriers want consumers to have confidence in direct carrier billing programs, they should strengthen their contracts with the protections consumers need."

For more details, see How Top Wireless Carriers Compare on Consumers Protections for Mobile Payments.


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