Comments of U.S. Public Interest Research Group and the Center for Digital Democracy
CFPB Request for Information Regarding the Use of Mobile Financial Services by Consumers and Its Potential for Improving the Financial Lives of Economically Vulnerable Consumers
Excerpts from the Summary
The U.S. Public Interest Research Group (U.S. PIRG) and the Center for Digital Democracy (CDD) commend the CFPB for its timely and much-needed review of the mobile platform-based financial services marketplace. We agree with Director Cordray that mobile technologies and services pose both opportunities and risks to consumers, their privacy, and to the kinds and price of services they are offered.[i] As the primary digital device, mobile phones have become a fundamental part of our daily lives.[ii]
Financial services companies are at the forefront of industries relying on mobile devices and services to identify potential customers, sell additional products, provide new forms of payment, and offer credit and banking services.[iii] Mobile consumer advertising and data-driven targeting practices for the financial, retail, and other key sectors have been shaped by industry research and standardization initiatives, as well as by market consolidation.
We believe, however, that it is important for the CFPB to understand more fully how mobile-based financial services are parts of a more comprehensive and interlinked digital applications and marketing environment. This is a critical period for the CFPB to ensure that the public receives the necessary consumer safeguards, especially for financial applications and for consumer privacy, as Americans rely on mobile devices for banking, payments, credit applications, shopping, e-commerce, and other related services.
USPIRG and CDD call on the CFPB to recognize that it must protect consumers by developing a comprehensive set of principles and safeguards for the overall digital marketplace, while also ensuring that existing consumer laws are effectively applied to online financial services.
We also concur with other comments from consumer organizations in this docket, such as the comprehensive National Consumer Law Center filing, which describe the critical need to ensure that consumer protections are extended and enhanced in the mobile marketplace.
A rulemaking following up on this request for information is required, especially to ensure that financially at-risk consumers actually benefit from mobile and digitally based financial services. The availability of financial services over a mobile device should be considered neither a panacea nor the answer to the major inequities in our society. While mobile provides greater opportunities for assisting the economically at-risk, that platform will also pose new threats to their economic well-being and privacy. As this comment discusses, contemporary mobile practices that take advantage of the powerful capabilities of personalized and pervasive digital marketing raise questions about whether at-risk consumers will be assisted in the long term. The array of tools and techniques that is already available to target (“monetize”) economically vulnerable consumers more effectively could—unless addressed by the agency now—undermine and erode their ability to enhance their financial security.
The CFPB should also leverage its efforts by assisting other agencies that have primary jurisdiction over broadband communications services. For example, the Federal Communications Commission (FCC) oversees key programs promoting mobile and digital affordability for consumers. Its universal service policies now address wireless services, and its action on the pending Comcast/Time Warner Cable merger, for example, or its decisions concerning Network Neutrality proposals, have the potential to help—or harm—underserved and at-risk populations in their efforts to gain access to affordable broadband. The CFPB can comment on FCC proceedings or otherwise assist its staff, just as other agencies comment on the Bureau’s proposals.[iv]
[i] Richard Cordray, “Prepared Remarks of CFPB Director Richard Cordray at the Mobile Request for Information Field Hearing,” Consumer Financial Protection Bureau, 11 June 2014, http://www.consumerfinance.gov/newsroom/prepared-remarks-of-cfpb-directo… (viewed 5 Sept. 2014).
[ii] Mark Bergen, “Welcome to the New First Screen: Your Phone,” Ad Age, 17 Mar. 2014, http://adage.com/article/digital/millward-brown-study-shows-mobile-outpa… James O’Toole, “Mobile Apps Overtake PC Internet Usage in U.S.,” CNN Money, 28 Feb. 2014, http://money.cnn.com/2014/02/28/technology/mobile/mobile-apps-internet/ (both viewed 5 Sept. 2014).
[iii] eMarketer, “US Digital and Mobile Banking 2014: User Forecast, Key Trends and Marketing Opportunities,” Aug. 2014, personal copy. See also Jerry Canning, “The Full Value of Mobile in Financial Services,” Think with Google, Mar. 2013, https://www.thinkwithgoogle.com/articles/full-value-mobile-financial-ser… Yahoo, “Finance,” https://advertising.yahoo.com/Industries/Finance/index.htm; Rocket Fuel, “Finance,” http://rocketfuel.com/solution/details/industry/finance; Amir Efrati, “Apple’s Mobile Wallet Talks Heat Up,” The Information, 23 July 2014, https://www.theinformation.com/Apple-Mobile-Wallet-Talks-Heat-Up; Adobe, “Solutions/Financial Services,” http://www.adobe.com/solutions/financial-services.html (all viewed 5 Sept. 2014).
[iv] See, for example, Federal Trade Commission, “FTC Staff Submits Comment to CFPB on Mortgage Disclosure Forms,” 2 Oct. 2012, http://www.ftc.gov/news-events/press-releases/2012/10/ftc-staff-submits-… (viewed 7 Sept. 2014).