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Financial Services Law Insights and Observations

CFPB Begins Collecting Input On Mobile Financial Services

CFPB Mobile Banking Mobile Commerce Mobile Payment Systems

Consumer Finance

On June 11, the CFPB released a request for information (RFI) about how consumers are using mobile financial services (MFS) to access products and services, manage finances, and achieve financial goals, with a focus on “economically vulnerable” consumers. The request does not cover point of sale payments, except with respect to mobile payment products targeted to underserved consumers. The request states that the information will be used to inform the CFPB’s “consumer education and empowerment strategies.” On June 12, the CFPB hosted a field hearing on MFS, which included presentations from consumer advocates and emerging mobile services providers regarding the future potential of MFS to reach the underserved.

To start the field hearing, Director Corday described the growth of technology in financial services and stressed the importance of understanding and encouraging the benefits of innovation without undermining the equally important goal of protecting consumers in the marketplace. He acknowledged that the FDIC and Federal Reserve have already done substantial work in the area of mobile banking services, and explained that the CFPB is now seeking to further those efforts through the RFI, which will help the CFPB: (i) explore how mobile services provide access to consumers that cannot easily access current financial services; and (ii) learn more about the real time money management opportunities mobile devices provide.

The CFPB’s inquiry also will review potential risks to consumers presented by MFS. For example, parts of the field hearing related to consumer data security, and panelists broadly described other potential risks related to online disclosures,along with the potential for mobile products or services to circumvent other existing consumer protections. In addition, the RFI seeks information that could serve regulatory and enforcement purposes. For example, the CFPB asks (i) whether there is a “risk that data will be used to direct underserved consumers to higher-cost products and services than they would otherwise be eligible to purchase and that may pose greater risk of financial harm;” and (ii) whether “low income consumers are less likely to detect hidden fees, and, if so, whether special attention needs to be provided to the design of mobile payments products targeted at low income consumers.”

Comments in response to the RFI are on or before September 10, 2014.