Consumers Union Pushes for Mobile Payment Fraud Protection
When you use your cell phone or tablet to purchase a digital product, like an app, the charge is added to your monthly wireless bill. However, if something goes wrong with your transaction, or someone steals your device and buys apps in your name, your rights will vary wildly depending on your wireless provider and payment method. According to a recent investigation by Consumers Union, your wireless carrier may not protect you from fraudulent charges, especially if you’re not paying with a credit or debit card. As if that wasn’t bad enough, any protections you do have may not be stated in your contract.
Although all wireless carriers have a way of dealing with disputed payments, there’s no legal precedent for them to follow (except in California). In May 2011, Consumers Union called on the nation’s top wireless carriers to provide the same purchase protection for mobile payments guaranteed by law for credit and debit card payments. Since then, they’ve been regularly communicating with representatives from AT&T, Sprint, T-Mobile and Verizon Wireless to better understand how they handle disputed payment transactions.
Fraudulent charges? You’ll get your money back…maybe
If you lose your smartphone, or someone steals it, better hope you report it before someone else racks up a bill. As of this writing, Verizon Wireless is the only top wireless carrier whose contract explicitly states that customers aren’t liable for charges related to a lost or stolen device. AT&T, Sprint and T-Mobile will protect consumers for any charges once the lost device is reported, but prior to that, consumers may be responsible for any charges made. If you discover other kinds of fraudulent charges on your bill, things get even more complicated. Cell phone billing errors occur with an alarming frequency, due to unauthorized third-party charges, also called “cramming”, and inevitable in-house errors. When asked by Consumers Union, all four major wireless carriers claimed to provide refunds for billing errors, in house or otherwise, but few clearly state this in their contracts.
California’s PUC regulations: a good start
If you’re dealing with a disputed cell phone charge, California’s the place to be. California’s Public Utilities Commission (PUC) rule gives phone customers the right to withhold payment of any disputed charge while it’s under investigation, and all investigations must be completed within 30 days. However, there is no similar law in other states. Additionally, not all carriers inform California customers of their rights. The AT&T and T-Mobile service contracts mention the law briefly, but Verizon Wireless doesn’t mention it at all. Sprint’s contract gets points for going above and beyond in this department: customers don’t have to pay for disputed charges as long as they’re reported within 60 days, although the process for removing third-party charges can be somewhat complicated.
Consumers Union’s suggested changes
Consumers Union would like to see consumers have more control over their mobile payments in general. In their call-to-action earlier this year, they asked wireless carriers to let customers withhold payments for disputed charges and set a cap on their monthly payments to prevent extra fees. Consumers Union also asked all carriers to re-credit customers for disputed charges, even if they have a prepaid phone. Right now, consumers who use these “pay as you go” phones are especially vulnerable to payment fraud. Verizon Wireless currently doesn’t allow prepaid customers to make mobile payment changes. AT&T, Sprint and T-Mobile allow customers to do so provisionally.
Protecting yourself against payment fraud
So far, we’ve yet to see any real changes in mobile payment fraud protection. In the mean time, Consumers Union recommends that mobile phone and tablet users take a few basic steps to protect themselves:
- Link your mobile account to a credit card. Even if your wireless provider won’t protect you from unauthorized charges, your credit card company will. Thanks to the CARD Act of 2009, credit card holders are not liable for more than $50 worth of unauthorized charges to their accounts. If you prefer not to use a credit card, a debit card is a good second choice, as these have comparable fraud protection laws. Avoid linking your mobile account to a prepaid credit card or direct phone bill, as these aren’t subject to the same regulations.
- Review your statements often. You’re responsible for monitoring your bills. If you find any suspicious charges, don’t wait to say something. Contact your customer service provider to get things straightened out.
- Report unfair billing practices to an appropriate agency. Is your wireless provider doing something sketchy? Report it to the Consumer Financial Protection Bureau or a similar government agency.
- Know what you’re up against. Consumers Union posted a breakdown of each major wireless carrier’s disputed billing practices on their Defend Your Dollars blog. Read what they have to say about your provider. You’ll be better prepared if a dispute comes up.