New mobile payment methods like digital wallets are changing the way consumers purchase goods and services. The House Financial Services Subcommittee on Consumer Credit, chaired by Rep. Shelley Moore Capito (R-WV), looks at whether current regulations adequately protect consumers using these new payment methods.
Witnesses include James H. Freis Jr., Director of the Treasury Department's Financial Crimes Enforcement Network (FinCen). He speaks about FinCen's plans to apply anti-money laundering rules to "virtual" currency transactions and discuss FinCen's prepaid access rule that covers plastic cards, electronic serial numbers and other methods of storing funds that have attracted organized crime and terrorist groups.
Stephanie Martin, Associate General Counsel for the Federal Reserve System's Board of Governors, discussed a report on consumer trends in the mobile market place, released in March of this year. The report indicates that consumer concerns about security and the usefulness of mobile financial services are holding back the emerging industry.
Congressmen asked about privacy protections and identity theft in mobile payments, asking about consumer protection for erroneous charges. Ms. Martin told them that the laws that protect customers making debit or credit purchases online also protect mobile charges, but that it is incumbent on the consumer to intiate the process.
Members also expressed concern that the rule-making procedure was too slow to keep up with the pace of change in the mobile technology arena, especially in the areas of consumer protection and international money laundering. Mr. Fries said that the threshold for policy and investigation of international payments was zero and that any transaction would be reviewed by his department.