Mobile technologies are being adopted rapidly as smartphones crossed the 50% barrier and consumers purchased $20.7 billion through mobile in the U.S. in 2012. But as the pace of mobile adoption quickens, fraudsters are always attracted to the path of least resistance and the 105 million smartphone users and 42 million tablet users in the U.S. will become targets. Additionally, the technology is beginning to outstrip the protections that have been put in place for consumers. To that end, the Federal Trade Commission (FTC) released a staff report today titled Paper, Plastic or Mobile that looks at three key issues of potential concern for consumers:

  1. Fraud Resolution: Institutions need to design clear policies for consumers to resolve disputes arising from fraudulent or unauthorized mobile charges.  “Mobile cramming” especially is a growing problem. Mobile cramming occurs when third parties place unauthorized charges on a consumer’s mobile phone bill.
  2. Security: Strong security measures are needed to protect sensitive financial information throughout the entire mobile payment process, such as through end-to-end encryption and secure data storage procedures.
  3. Privacy: Mobile payments companies will need to be transparent, offer consumer choice, and provide privacy protection. Mobile payments offers potential access to a much larger trove of data that presents an opportunity to greatly improve and personalize services to consumers, but it also has a darker side that can be abused if not done correctly and sensitively. Security and value are the top reasons consumers are holding back from using mobile payments, with 44% of consumers reluctant to use contactless stating they do not think it is a safe form of payment. Mobile technologies provide incredible convenience for consumers, but without security and privacy protections in place, criminals will flock like seagulls to a picnic at the beach. (Come visit us at CARTES 2013 in Vegas.  Mary Monahan will be presenting on  Battle for Control of the Mobile Wallet and Al Pascual will be the Chairman of the track "Electronic ID for a Secure Identity")