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Financial Services Law Insights and Observations

Texas AG Settles with Online Payments System over Security Practices

State Attorney General Mobile Payment Systems


On May 20, Texas AG Ken Paxton announced that his office reached a settlement agreement with a California-based online payments system to resolve allegations that a money transfer mobile application – of which the payments system is the parent company – violated the Texas Deceptive Trade Practices Act (DTPA). According to the state’s investigation into the payments system, the mobile application allegedly (i) used consumers’ phone contacts without clearly disclosing how it would use the contacts; (ii) failed to clearly disclose how consumers’ transactions and interactions with each other would be shared; and (iii) misrepresented certain communication features. In addition to agreeing that the mobile application will reform its privacy and security disclosure practices, the online payment system must pay the state $175,000.