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Smartphones replacing cash

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You just wanted a cup of coffee to start the morning.

Now, as you fumble with your wallet, taking it out, retrieving the cash or credit card, you can feel the glares and impatience of the other java drinkers standing behind you, waiting, needing to get to work.

Enter an emerging technology which makes paying for that coffee as easy and convenient as waving your smartphone. Mobile payments are a new trend which enables consumers to make retail purchases without using their credit or debit cards or cash. It can turn that morning “argh” moment into “ahhh.”

IL_Scan_Phone04-15col.jpg Research shows that the use of mobile payments will quadruple globally to more than $1.3 trillion over the next five years. (IL Photo/ Perry Reichanadter)

However, how that mobile payment is processed has been compared to the Wild West. With the transaction potentially passing through many hands before it reaches the bank, using your smartphone could be the equivalent of giving your card numbers, account numbers, pin codes, passwords and personal data to strangers.

Suddenly that “ahhh” has changed to “uh-oh.”

Adding to the financially damaging situation, if a consumer discovers fraud or theft linked to the mobile payment, he or she may learn that the traditional consumer protections that apply to banks do not apply here.

hughes Hughes

“It’s the Wild West, it’s just nobody knows it,” said Sarah Jane Hughes, scholar and fellow in commercial law at Indiana University Maurer School of Law.

The innovation can be divided into two categories: mobile banking and mobile payments.

Mobile banking gives direct access to a bank account and comes with all the protection and security that covers a bank. The primary law governing this kind of transaction is the Electronic Fund Transfer Act and Regulation E of the Federal Reserve Board. Enacted by the U.S. Congress in 1978 in response to the introduction of ATMs, the EFTA defines the rights and liabilities of consumers along with the responsibilities of all participants in the electronic transfer activity.

Mobile payments that directly access the consumer’s credit card are governed by the federal Truth in Lending Act and Regulation Z of the Federal Reserve Board. Those that draw from a debit card are generally regulated by the federal EFTA and the state’s Uniform Commercial Code.

cohen Cohen

The least consumer protection comes with mobile payments that rely on intermediaries to process the transaction. For example, the account information used in making the mobile payment will travel from the consumer to the merchant, then to a payment provider, then possibly to the bank or to the mobile service provider like AT&T or Verizon where the charge will show up on the individual’s phone bill.

In a presentation during the International Payments Policy Conference at the Federal Reserve Bank of Kansas City, Mo., Hughes pointed out the mixed bag that

comes with mobile payments. While payment providers’ innovations are making payments faster, easier and maybe less costly, these new products are not covered, as a whole or in part, by the traditional regulatory regimes. Consequently, consumers and merchants could be uncertain of their rights and responsibilities.

hilsshea Shea

“The disparity between the regulation of mobile payments made via access devices directly between the sender’s demand account to a merchant and those that use processing intermediaries including telecom and other nondepositary providers to handle such payments is likely to remain until Congress acts,” Hughes told the conference.

Capitol Hill has convened a couple of hearings on mobile payments but attorneys do not see nor expect any new laws to be enacted in the near future regarding this technology.

Tom Walsh, partner at Ice Miller LLP, looked back to the late 1990s when consumers turned to buying goods and services over the Internet. At that time, regulations had to play catch-up because many businesses took advantage of loose privacy laws, collecting and selling personal data which put consumers at risk.

He does not see any gapping hole in the regulatory polices that are leaving consumers exposed as they make mobile payments. The framework is now in place so the regulations will just have to be adapted rather than created from a consumer protection standpoint.

bray Bray

Despite the questions about safeguards, customers seem to be embracing mobile payments. Juniper Research predicted that over the next five years, mobile payments will quadruple globally to more than $1.3 trillion. Also, a survey of stakeholders by the Pew Internet & American Life Project found that 65 percent of respondents believe by 2020 “most people” will be using smart devices to make purchases.

One thing that will attract Congressional attention and make consumers nervous is bad behavior. A major event like large-scale fraud or identity theft linked to mobile payments that injures a significant portion of the public would likely slow adaptation and trigger new laws and rules.

States usually defer to the federal government to regulate the banking industry, said Howard Cohen and Jane Shea, attorneys at Frost Brown Todd LLC. One way that states could implement new rules would be to amend the Uniform Commercial Code, but that process can take many years because, in order to keep the code consistent across state lines, most if not all states would have to adopt the same language.

However, a rule change could be done relatively quickly through the Federal Reserve Board. Even though the board is required to publish its proposals and solicit public comment, the process could be completed in months.

Currently, consumers do not always have a clear understanding of which government agency or business in the mobile payment chain to call when they discover irregular activity on their accounts. All the stakeholders, said Michelle Kaiser Bray, partner at Faegre Baker Daniels LLP in Indianapolis, are collaborating, along with looking for regulatory guidance, to address data protection, risk management, privacy and security concerns.

Bray cautioned against the government becoming heavy-handed.

“We don’t want to be so bogged down in regulatory framework that we freeze the innovation itself,” Bray said. “It will chill innovation and all the stakeholders will be less inclined to come up with product which, at the end of the day, hurts consumers.”

Just like the Wild West of old, consumers today will have to be very proactive in protecting themselves. Log-ins and passwords are no longer sufficient security, according to attorneys. Consumers should install on their mobile devices the ability to lock it down and wipe it clean if it is lost or stolen. And, just like when a wallet is lost, consumers should know the phone numbers of the financial institutions and service providers to call immediately.

Also, consumers should read the contracts and privacy agreements that come from their banks, mobile providers and with the apps they purchase. Instead of rapidly scrolling through the contracts and clicking “I Accept,” attorneys said consumers should read them so they know what to do and whom to contact if their accounts are compromised.

“They aren’t easy to read,” said Abby Kuzma, director of the Consumer Protection Division at the Office of the Indiana Attorney General, “but, nonetheless, that’s the reality.”•

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  1. Am I the only one who sees that the City is essentially giving away the MSA site AND giving millions to build new buildings on the site when this site would be the perfect place for the Justice Complex? Across from City-County, check; keeping it centrally located, check, etc. It's my understanding that the GM site must be purchased by the City from Motors Liquidation Company. STOP WASTING WHAT WE ALREADY HAVE AND OUR TAX DOLLARS! The Ballard Administration has not been known for it's common sense...never voted for him and never will!

  2. This guy sounds like the classic molester/manipulator.

  3. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

  4. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

  5. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

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