Just about any new cellphone or tablet allows the user to make digital purchases that are subsequently charged to their wireless account. And while the four major wireless providers — AT&T, Verizon, Sprint, and T-Mobile — claim to provide ample protections for customers, our pals at Consumers Union have found that users may not be getting fewer protections than they would for purchases made using a credit or debit card.

In addition to pushing wireless providers to guarantee the same protections for mobile payments that consumers get from credit card purchases, Consumers Union has been pressing these carriers to police themselves by enacting the same protections currently given to California phone customers as a result of regulations issued by that state’s Public Utilities Commission (PUC).

“Consumers using mobile payments should get the same strong protections they currently enjoy when they make purchases with a credit card or debit card,” said Michelle Jun, senior attorney for Consumers Union. “But we found that consumer rights can vary widely between wireless carriers and the protections carriers claim to provide are often nowhere to be found in customer contracts.”

Here’s how wireless providers stacked up against credit and debit cards on several important factors:
Limiting liability when phones are lost or stolen:
A credit card customer’s liability is limited to no more than $50 for unauthorized charges, and Verizon Wireless’ contract clearly states that customers are not liable for charges related to a lost or stolen phone. However, while contracts for AT&T, Sprint, and T-Mobile protect customers from fraudulent charges made after a phone is reported lost or stolen, consumers may still be on the hook for charges made before reporting the missing phone to their provider.

Limiting liability for disputed charges:
If a billing error — including a dispute with a merchant about the delivery or acceptability of goods or services — appears on a monthly credit card statement, there is no liability for the customer as long as they report the error within 60 days. The four major wireless carriers all insist they provide refunds for billing errors or when customers are unhappy with purchases, but Consumers Union found that these rights are not clearly disclosed in their contracts.

Re-crediting pre-paid customers within 10 days for disputed charges:
Report a fraudulent transaction involving a debit card to your bank and it has 10 days to complete its investigation or provisionally re-credit those funds to your account. For pre-paid customers on AT&T, Sprint, and T-Mobile, there are verbal promises that these providers strive to provide prompt refunds, but none of them guarantee in their contracts that pre-paid customers will get a provisional refund within ten days after reporting fraudulent charges. For Verizon Wireless it’s currently a non-issue, as VZW doesn’t allow pre-paid customers to make mobile payment charges.

Giving customers the right to withhold payments for disputed charges:
By law, phone customers in California have the right to withhold payment of disputed charges while an investigation is conducted. Furthermore, that investigation must be completed within 30 days. Sprint’s contract indicates that customers don’t have to pay for disputed charges as long as they are reported within 60 days. AT&T claims that all customers have the right to withhold payments during an investigation but its contract only discloses this right to Californians. T-Mobile discloses these rights for California customers but not for customers living in other states. Verizon’s contract allows customers to withhold payment for charges related to lost or stolen phones but it does not indicate that consumers have this same right for other kinds of disputed charges.

Enabling customers to set a cap on mobile payment charges:
Once again, California leads the way, as consumers there have the explicit right to block third party charges on their accounts. All four major wireless carriers say they allow customers to block third party charges but AT&T and Sprint do not disclose this right in their contracts. AT&T, Sprint and Verizon Wireless set their own dollar limits on allowable charges (AT&T has a $100 limit per month per line while Sprint and Verizon Wireless limit charges to $25 per month per line). AT&T enables consumers to set their own limits but charges $4.99 per line each month to do so.

“As new mobile payment options become available, consumers are better off sticking to services linked to credit cards or debit cards, which come with strong protections required by law,” said Jun. “If wireless carriers want consumers to have confidence in direct carrier billing programs, they should strengthen their contracts with the protections consumers need.”

How Top Wireless Carriers Compare on Consumer Protections For Mobile Payments [DefendYourDollars.org]

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