Consumers Union warns about T-Mobile payment service risk

Nonprofit urges carriers to spell out protections against billing errors, fraud

The common wisdom is that we’re moving toward a world of mobile payment services that are supposed to make life easier for consumers.

But Consumers Union, the nonprofit publisher of Consumer Reports, thinks we all need to slow down just a bit and work out some important details.

The publisher on Monday issued a warning to consumers that the “Direct Carrier Billing” mobile payment service announced by T-Mobile USA on Aug. 2 is fraught with potential risks for users.

"Mobile payment products promise a new, convenient way to pay but consumers could end up losing money if something goes wrong with their transaction," Michelle Jun, Senior Attorney for Consumers Union, said in a statement. "Consumers need to be protected in the event of a billing error or if the goods they order aren’t as promised or if they become victims of fraud. Mobile payment services like the one being launched by T-Mobile could put consumers at risk and fail to provide the protections they deserve."

T-Mobile’s service will allow customers to buy digital content through their smartphones, tablets or PCs and bill the amount due to their T-Mobile phone account. This would allow consumers to avoid having to manually input their credit card numbers, expiration dates and security codes, information typically required when making an online purchase.

But Consumers Union argues that this leaves customers vulnerable because charges applied directly to their phone bills aren’t covered by the same federal statutory protections applied to credit card or debit card payments.

"T-Mobile’s mobile payment plan may eliminate the need to enter credit card information when making purchases, but it also tosses out the consumer protections that come along with credit cards," said Jun.

Which is a pretty high price for convenience, when you think about it.

Consumers Union called for T-Mobile and other wireless carriers to include consumer protections against billing errors or fraud in their contracts.

T-Mobile USA is the No. 4 wireless carrier in the U.S. AT&T has made a $39 billion offer to purchase T-Mobile USA from Deutsche Telekom. The merger currently is under review by the Department of Justice and Federal Communications Commission.

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