The Street recently highlighted how mobile payments may be the new frontier for cyber criminals interested in stealing your passwords, e-mail log-ins, and credit card numbers and making fraudulent purchases. The article cited a new report by Juniper Research that found that fraudulent mobile payment transactions are common with services that allow consumers to make purchases and bill them to their cell phone accounts:
“Companies that use mobile billing -- where consumers pay for online goods through their carrier's bill rather than their credit card -- run a high risk for fraud, said Juniper Research. Juniper found that 25% of mobile payments through such systems were bogus, meaning that bills contained charges made by criminals who had gained access to the user's phone number and personal information.”
T-Mobile and Verizon are two wireless carriers who are launching these kinds of mobile payment services. We raised concerns about T-Mobile’s Direct Carrier Billing service earlier this month. Verizon is teaming up with Payfone to launch a mobile payment service that gives consumers the option of linking their purchases to their cell phone account. Consumers using mobile payment services that bill transactions to their cell phone bills are at risk of losing money in the event of fraud or when merchants make mistakes because they don’t get the same strong consumer protections that come with credit cards.