Reporting Paula Ebben
BOSTON (CBS) – Paying for every day purchases with a smart phone is getting more popular, but many shoppers wonder if it is safe.
Belmont accountant Tom Osler likes to check out fast so he often just flashes the app he downloaded on his phone. “Just wave the bar code device and the transaction happens instantly,” he explained.
With a credit card, a shopper might sign a receipt, be asked for a PIN, or some other identification. But that is not the case with the phone app.
Boston University Law School graduate Hemanshu Nigam, a security expert, said, “None of that is required, so that’s a huge security risk.”
The Federal Trade Commission has started to follow this trend. Spokeswoman Patricia Ross said some of the focus is on the number of phones that get stolen. “How does the retailer know that is in fact the right consumer who has the phone?” she asked.
The first security measure a consumer can take is to make sure the app selected is password protected.
Another step is to link these mobile payments to a credit card rather than a debit card. Nigam said that makes it easier to dispute a charge. “When that bank account debit is gone, it’s an immediate removal of money from your bank. It’s gone.”
Before downloading one of these apps, the FTC recommends you find out who you can call if something goes wrong.
Also ask how a purchase can be disputed, and how money would be returned.
Finally, does the provider protect you from fraudulent transactions?
The FTC is also examining how buying habits could be tracked. “One of the things we want to look at it is what information is collected from consumers, how is it transferred, and who actually gets access to it,” said Ross
Using the app does result in some unsolicited promotional emails for Osler, but he thinks loyalty rewards like a discounted lunch more than compensates for any inconvenience.
More importantly, he is confident that his money is safe. “I feel secure that my device is locked.”