T-Mobile carrier billing raises risks, says Consumers Union

Consumers Union has issued a warning regarding T-Mobile's Direct Carrier Billing and similar mobile payment solutions (CP: T-Mobile's newest mobile payment solution raises a profit question about direct billing), noting they lack fraud and other protections traditional credit cards enjoy.

Introduced last week, the initiative makes T-Mobile the latest major carrier deploy carrier billing, which enables subscribers make purchases from their phones and add the fee to their monthly phone bill.

While some have warned against using strong-fisted phone companies as money lenders (Unfiltered: Mobile payments: wonderfully convenient, or your money in the wrong hands?) Consumers Union, the nonprofit publisher of Consumer Reports, more specifically warns that the arrangement leaves consumers without the protections inherent to traditional credit card purchases.

“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 know that they’ll 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.”

The statement goes on to explain that federal law protects consumers in the event that their credit or debit cards are stolen, with credit cards offering the highest liability protection of all. While mobile payment transactions linked to credit or debit cards entitle consumers to the same protections, mobile charges linked to other forms of payment "don't enjoy any of these legal protections," the company warned.

"If wireless carriers expect consumers to feel comfortable using mobile payment services, they need to provide at least the same level of protections that come with credit cards, " said Consumers Union's Jun. "T-Mobile and other wireless carriers can safeguard consumers from mobile payment fraud and mistakes by putting those protections in their contracts."

According to the statement, T-Mobile has said that it will respond to the request for greater consumer protections, but as yet it hasn't.