The Consumer Financial Protection Bureau (CFPB) has released a set of Consumer Protection Principles relating to the development of faster and safer consumer payment capabilities in both new and existing payment systems. The principles are designed to ensure that new payment systems are safe, transparent, accessible and efficient.
The Consumer Protection Principles outlined by the CFPB, include the following:
1. Consumer Control Over Payments
Any new faster payment system is clear about when, how, and under what terms consumers have authorized a payment. Each payment aligns with what the consumers has authorized. Systems enable consumers to put parameters on the payment, such as limiting the time period for which an authorization is valid, the amount, and the payee. Systems also specify procedures for consumers to easily revoke authorization.
2. Data and Privacy
When helpful to consumers, consumers are informed of how their data are being transferred through any new payment system, including what data are being transferred, who has access to them, how that data can be used, and potential risks. As appropriate, the systems allow consumers to specify what data can be transferred and whether third parties can access that data. When consumer data are collected, they are only used in ways that benefit consumers. The systems protect against misuse of the data associated with payment transactions.
3. Fraud and Error Resolution Protections
Faster payments are accompanied by robust consumer protections with respect to mistaken, fraudulent, unauthorized, or otherwise erroneous transactions. System architecture ensures that information is created and recorded to facilitate post-transaction evaluation. Systems provide mechanisms for reversing erroneous and unauthorized transactions quickly once identified. They also provide consumers with regulatory protections, such as Regulation E and Regulation Z, along with other appropriate safeguards.
4. Transparency
Faster payments include real-time access to information about the status of transactions, including confirmations of payment and receipt of funds. Consumers also receive timely disclosure of the costs, risks, funds availability, and security of payments.
5. Cost
To ensure access and ubiquity, systems are affordable to consumers. Fees charged to consumers are disclosed in a manner that allows consumers to compare the costs of using different available payment options. For consumers using any system, fee structures do not obscure the full cost of making or receiving a payment.
6. Access
Any new faster system is broadly accessible to consumers. To ensure access and usability, systems are widely accepted by businesses and other consumers. They permit consumer access through qualified intermediaries and other non-depositories, such as mobile wallet providers and payment processors, except to the extent necessary to protect functionality, security, or other key user values.
7. Funds Availability
Faster payments bring with them faster guaranteed access to funds, which decreases consumer risk of overdraft and declined transactions due to insufficient funds. Consumers – not just depository institutions or third parties – are primary beneficiaries of faster clearing and settlement.
8. Security and Payment Credential Value
Systems have strong built-in protections to detect and limit errors, unauthorized transactions, and fraud. These protections safeguard against and respond to data breaches. System architecture and rules enable gateway institutions to offer consumers enhanced security protections. Systems also limit the value of consumer payment credentials so that security breaches are of limited worth to fraudsters and minimally harmful to consumers. Credential value limits can be implemented with tokenization and other tools that impact the data transferred or stored in connection with payments.
9. Strong Accountability Mechanisms that Effectively Curtail System Misuse
The goals and incentives of system operators, participants, and end users align against misuse. Commercial participants are accountable for the risks, harm, and costs they introduce to payment systems and are incentivized to prevent and correct fraudulent, unauthorized, or otherwise erroneous transactions for consumers. Systems have automated monitoring capabilities, incentives for participants to report misuse, and transparent enforcement procedures.