Shoppers are increasingly depending on their mobile devices to act like credit cards, and that means cellphone carriers should start acting more like credit card companies when it comes to fraud and error protection, says a leading consumer advocate.  At issue is what happens if a merchant makes an error or if your phone is lost or stolen, Consumers Union said in a new report. Depending on how the money is taken from your account, the answer is very different, according to a report by the non-profit advocacy group Consumers Union. The group is urging wireless companies to upgrade their consumer safeguards for fraud and errors and include them in their contracts.  As Consumers Union issued its call for action, Starbucks was announcing the expansion of its popular mobile payment app — adding an Android version and increasing the number of locations at which it can be used. That announcement highlighted the dynamic growth of this type of payment and drew greater attention to the inconsistent protection offered to consumers.  “As more Americans start using mobile phones to make purchases, we need to make sure that consumer protections keep pace with all the new technological advances,” Michelle Jun, senior attorney for Consumers Union’s Defend Your Dollars campaign said in a statement. “Consumers shouldn’t have to worry that a lost or stolen mobile phone or billing error could turn into a costly financial headache.”  A spokesman for ATT Wireless said the company would not comment on the report and suggested the answer ought to come from the industry’s trade association, the CTIA. The CTIA responded by saying an answer ought to come from the carriers. Sprint said it had nothing to say about it right now. Of the largest carriers, only Verizon Wireless had something to say.  Verizon would not address the report specifically, but a spokesman did discuss the issue.  “Before we bring a product into the marketplace, we’re working to ensure security, privacy, safety and ease of use — combining the work of the finest security experts in the financial and mobile telecommunications industries to devise the best possible anti-fraud measures,” Verizon Wireless spokesman Jeffrey Nelson said.  Consumers Union said more than $16 billion in mobile payments were made in the U.S. last year and that’s projected to soar to more than $214 billion within four years.  Consumers Union said it sent letters in May to 18 wireless carriers asking that they increase protection for consumers who use their phones to pay.  Credit cards and debit cards include fraud protection — stronger for credit cards — but gift cards and prepaid accounts do not. So, if the transaction is through a credit card or debit card linked to the phone, the group said the protections would be the same as just using the card.  “Consumers making mobile payments linked to wireless phone accounts, prepaid cards, or gift cards run the risk of losing funds to fraudulent or erroneous charges,” Consumers Union said.  In a review of the contracts of the 18 carriers the group sent letters to, this what they found:  Consumers Union wants the carriers to limit a consumer’s liability to $50 for erroneous charges made after a wireless device is lost or stolen, to allow withholding of payment during a dispute and to allow consumers to limit how much money can be charged directly to their wireless accounts.  Jun said the the Consumer Financial Protection Bureau is going to have to create consumer protections for mobile payments.  “In the meantime, wireless carriers should provide strong mobile payment safeguards in their contracts so consumers don’t lose money to mistakes or fraudulent charges,” she said. “Other mobile payment service providers should adopt similar protections.”
What kinds of consumer protection exists for shoppers who pay with a wave of their phone? That depends.