Report: carrier billing lacks consumer protection - Mobile World Live

Report: carrier billing lacks consumer protection

09 AUG 2011

A new report by leading US consumer watchdog Consumers Union says that mobile subscribers are not protected in the event of fraud or merchant error if they use carrier billing rather than their credit or debit cards. “Mobile payment products promise a new, convenient way to pay but consumers could end up losing money if something goes wrong with their transaction,” says Michelle Jun (pictured), senior attorney for the Consumers Union.  Carrier billing enables mobile subscribers to make purchases without the need to manually enter their credit card information into their handsets. Instead their purchases automatically appear on their monthly bills, so adding to convenience. But Consumers Union's Jun says payments that go directly to a subscriber’s bill do not enjoy the same statutory protection as using a credit or debit card. This inconsistency leaves subscribers in a weaker position to get their money back in the case of fraud or a mistake by a retailer.

Mobile operators are pushing the convenience of carrier billing as a key attraction for subscribers but the Consumers Union has revealed the downside to their ease-of-use argument. The most recent high profile announcement on the launch of carrier billing service came last week from T-Mobile. The operator said it will extend its existing carrier billing service to a wider range of digital goods from later this month.

In June, the consumer group called on T-Mobile and other mobile operators to offer stronger protection in their contracts. A T-Mobile spokesperson indicated at the time that the operator would respond to the Consumers’ Union request but, says the group, “no response has been received”.

Federal law currently offers protection to subscribers if their credit or debit card is lost, stolen or misused in some way. Credit cards offer the most protection followed by debit cards. If a mobile phone-based payment is linked to either card then the subscriber is entitled to the same level of protection. But mobile payments linked to other forms of payment, such as a subscriber’s monthly bill, do not have any legal protection

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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