Mobile Payments and the FTC Manas Mohapatra Director of Mobile Policy Mobile Technology Unit Federal...

Manas MohapatraDirector of Mobile PolicyMobile Technology Unit

Federal Trade CommissionThe views expressed are not necessarily those of the Commission or any individual Commissioner.

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Mobile Technology UnitPolicy initiatives Law enforcement actions

Section 5 of the Federal Trade Commission Act broadly prohibits “unfair or deceptive acts or practices in or affecting commerce.”◦ Deception a material representation or omission that is likely to

mislead consumers acting reasonably under the circumstances.

◦ Unfairness practices that cause or are likely to cause substantial injury to consumers that are not outweighed by countervailing benefits to consumers or competition and are not reasonably avoidable by consumers.

Flexible law that can be applied to many different situations, entities, and technologies.

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Reverb (Online Endorsements) Acne Apps (Ad Substantiation for Health Claims) W3 Innovations (COPPA) Frostwire (Mobile Peer-to-Peer File Sharing) Mobile background screeners letters (FCRA) Google (Final Consent Order) Facebook (Proposed Consent Order)

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Past Workshops:◦ Town Hall: Pay on the Go - Consumers & Contactless

Payment (2008) Introduction to Contactless Payment: What it Is and How

it Is Used Consumer Understanding and Acceptance of Contactless

Payment Technology Contactless Payment Cards & Mobile Payment Devices

Transatlantic RFID Workshop on Consumer Privacy and Data Security (2008) RFID in Contactless Payment Systems

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Mobile phones are changing the way consumers make payments.

Perceptions of limited usefulness and concerns about security are holding back the adoption of mobile financial services.

The “underbanked” make significant use of mobile financial services.

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Mobile Payments: The Present and the FutureOpportunities and Challenges for Businesses and Consumers Legal Landscape and Dispute ResolutionDrilling Down: Fraud Mitigation and Data SecurityDrilling Down: Privacy Issues

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Privacy Issues What information is being collected about

consumers? New information flows from traditional payment

methods How is that information being used and who is it

being shared with? Are consumers being informed adequately?

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Source: “A Snapshot of Select Mobile Payment Providers’ Disclosures – FTC Staff’s Preliminary Observations, Slide 13, April 26 2012.

• 8 of the 19 companies reviewed by FTC staff stated that they send aggregate information to third-party advertisers

• Many companies had statements about who they would share consumers’ personal information with. Examples of statements about when a company may disclose or provide personal information:

• “to perform business support functions on our behalf”• “for the purposes of . . . improving the user experience”• "to companies that provide services to help us with our business

activities such as shipping your order or offering customer service.“• “to strategic partners . . . that help . . . market to customers.“• “with . . . trusted third parties, to ensure that you have a safe, high-

performance experience”

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Privacy Issues The risks to privacy are heightened in the mobile

payments space. Collection of sensitive information –

SSNs data from credit reporting agencies location information consumer’s purchases over time.

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Privacy Issues Collection and storage of personal data poses risks

that the information will be used for unintended purposes or fall into the wrong hands.

Companies that collect data should minimize risks by following three basic principles – “privacy by design,” choice for uses beyond the context of the transaction, and transparency. FTC Privacy Report 2012.

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