November 2015

Mobile financial services

A summary of comments from the public on opportunities, 

challenges, and risks for the underserved.
1 CONSUMER FINANCIAL PROTECTION BUREAU 

Table of contents

Table of contents.........................................................................................................1

Executive summary.....................................................................................................3

1. About this report.................................................................................................10

2. Scope of mobile financial services for the underserved.................................12

2.1 Mobile and the underserved................................................................... 12

2.2 Defining MFS and its use........................................................................ 16

2.3 MFS is a channel, not a separate product .............................................. 37

3. Opportunities ......................................................................................................40

3.1 Industry: Costly but scalable options .....................................................40

3.2 Consumers: Saving money and time ......................................................46

3.3 Outreach efforts to connect underserved consumers to mobile ............49

4. Challenges and risks..........................................................................................53

4.1 Security ................................................................................................... 54

4.2 Privacy.....................................................................................................58

4.3 Digital financial literacy and access........................................................ 65

4.4 Financial loss ..........................................................................................69

4.5 Loss of other channels – person-to- person contact and customer 

service ..................................................................................................... 72
2 CONSUMER FINANCIAL PROTECTION BUREAU 

5. Education and empowerment – ideas for the future ......................................76

5.1 Suggested areas for further information and research .......................... 77

6. Conclusion ..........................................................................................................82
3 CONSUMER FINANCIAL PROTECTION BUREAU 

Executive summary

The Consumer Financial Protection Bureau (Bureau or CFPB), established under the DoddFrank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), has as part 

of its mission to empower consumers to take more control over their economic lives. Part of the 

Bureau’s charge is to promote financial education, research developments in markets for 

consumer financial services and products, and provide information, guidance, and technical 

assistance regarding the offering and provision of consumer financial products or services to 

traditionally underserved consumers and communities. 

A major development in the consumer financial services market over the past few years has been 

the increasing use and proliferation of mobile technology to access financial services and 

manage personal finances. Consumers are using mobile financial services (MFS) – financial 

services and products accessed through mobile phones and other devices – more and more to 

access accounts, pay bills, deposit funds and manage their financial lives. The increasing use is 

not surprising given that 87-90 percent of the adult population in the United States has a mobile 

phone and approximately 62-64 percent of consumers own smartphones.1 For example, for 

those with bank accounts, the rate of mobile banking use went from 22 percent in 2011 to 39 

percent in 2014; 52 percent of those with smartphones reported using mobile banking in 2014.2

 

1 FEDERAL RESERVE SYSTEM, CONSUMERS AND MOBILE FINANCIAL SERVICES 2015 1-2 (MARCH 2015) [hereinafter FRB 2015

MOBILE SURVEY]; Pew Research Center, Mobile Technology Fact Sheet (2014) available at 

http://www.pewinternet.org/fact-sheets/mobile-technology-fact-sheet/ (last visited May 25, 2015)[hereinafter Pew 

Mobile Technology Fact Sheet 2014]; Pew Research Center, U.S. Smartphone Use in 2015 13 (April 

2015)[hereinafter Pew Smartphone Use 2015].

2 FRB 2015 MOBILE SURVEY, supra note 1, at 6, 10.
4 CONSUMER FINANCIAL PROTECTION BUREAU 

The Bureau’s Office of Financial Empowerment issued a Request for Information in June of 

20143to help the Bureau understand better the potential for mobile financial services to help 

underserved consumers – including low-income, unbanked, underbanked and economically 

vulnerable consumers – access products and services that help them achieve their financial 

goals. The focus of the RFI was not mobile proximity (or “point of sale”) payments except in so 

far as those products may be marketed to or used by underserved consumers. In response to 

the Request for Information, we received comments from individuals, financial services 

providers, financial institutions, regulators, trade associations, research and consulting firms, 

academics, nonprofits, and consumer advocacy organizations. While several trade associations 

submitted comments, we received few comments directly from financial institutions and 

providers themselves. 

The following are some of the key takeaways from the comments related to mobile financial 

services and the underserved. This report is not intended to identify areas in which the Bureau 

may or will take regulatory, supervisory, or enforcement action. Some of the commenters’ 

views on these topics are included where relevant to the particular topic of the discussion. 

Increasing smartphone use presents opportunities for expanded use of 

MFS for the underserved

The rate of growth in smartphone use among underserved households and individuals is 

growing and significant. For example, 44 percent of unbanked individuals4 and 50 percent of 

adults living in households earning less than $30,000 per year have smartphones.5 For many, 

their smartphones or devices are the primary way they access the internet.6 Increased 

smartphone use appears to be correlated with increasing use of MFS among the banked as well 

 

3 http://www.gpo.gov/fdsys/pkg/FR-2014-06-12/pdf/2014-13552.pdf

4 FRB 2015 MOBILE SURVEY, supra note 1, at 1-2.

5 Pew Smartphone Use in 2015, supra note 1, at 2, 13.

6 According to Pew, 13 percent of those in households earning less than $30,000 annually are “smartphonedependent,” defined as having neither traditional broadband service at home, nor easily available alternatives for 

going online other than their cell phone. Pew Smartphone Use in 2015, supra note 1, at 2, 13.
5 CONSUMER FINANCIAL PROTECTION BUREAU 

as the un- and underbanked.7 For certain demographic groups and subpopulations, however, 

there is considerable variation. For example, commenters provided evidence that Hispanic 

adults have a higher rate of smartphone ownership and mobile banking and mobile payments 

usage than the general population.8 Rural residents on the other hand, appear to have lower 

rates of smartphone ownership and mobile financial services activity.9 

Focus on products first, channel second

Comments indicated while mobile may be a useful channel through which to access products for 

underserved consumers, it is critical that financial services providers focus first on ensuring the 

underlying products and services meet consumer demand in ways that advance consumer goals. 

Faster payments could help industry and consumers

Some of the commenters said that faster payments would help accelerate use of Remote Deposit 

Capture (depositing checks remotely with the camera on the phone) and other mobile financial 

services that were identified by commenters as potentially helping consumers save time and 

money, which could make higher priced alternative financial services such as high fee check 

cashing services less attractive to underserved consumers. Commenters stated that underserved 

consumers tend to use alternative financial services over bank services because they want 

immediate access to funds or they may not qualify for bank accounts.10 Though industry 

comments supported faster payments, many acknowledged that delays are often not caused by 

the speed of the various payment systems, but caused by the need to address potential fraud 

 

7 See discussion infra at pp. 16-37.

8 See discussion infra at pp. 19-20, 33-34. In this report, when describing or summarizing study results, the terms 

used to identify race, ethnicity or other demographic characteristics of populations are those used by the publishers 

of the reports or other information sources. These terms or demographic characterizations are not necessarily those 

used by or endorsed by the CFPB.

9 See FRB 2015 MOBILE SURVEY, supra note 1, at 7-8.

10 American Bankers Association (ABA) #45, at 6; Consumers Union, #30, at 6; Center for Financial Services 

Innovation (CFSI), #6, at 9 (overall desire of low-income consumers for immediate access to funds).
6 CONSUMER FINANCIAL PROTECTION BUREAU 

issues (such as double deposits – discussed more fully at pages 22-25), and that technological or 

other solutions to fraud risks would be welcomed.

Mobile financial services need to be paired with in-person services

There was general consensus among the commenters that for mobile financial services to 

effectively reach underserved consumers, the mobile channel must be paired with consultative 

or assistance services, at least in the short-term. Some commenters expressed concerns that the 

void left by branch closures in low-income neighborhoods could not be filled by mobile financial 

services alone. The value of MFS to underserved consumers, comments suggest, can be realized 

with the assistance of one-on-one or other in-person facilitation. One commenter gave as an 

example hybrid services, such as small kiosks with personnel, where personal assistance is 

linked to mobile. However, comments indicated that these options are not yet widely available 

or familiar to the underserved population. 

Mobile financial services can save consumers money and time 

For consumers, the ability to access financial services anytime, anywhere can save time and 

money. Comments suggest that some underserved consumers are saving more as they use 

mobile financial services frequently to check balances, deposit checks remotely and use tools to 

manage their money. Accessing financial information and managing finances in real time is 

valuable to these consumers. Comments suggested more research is needed on the impact of 

using mobile financial services on consumers’ financial lives.

Two capabilities that commenters identified as holding much potential for reaching the 

underserved in ways that could produce savings for both providers and consumers were 

mobile/online account opening and mRDC (mobile Remote Deposit Capture). Since customers 

typically continue conducting their financial services using the channel they initially used to 

acquire an account, comments suggested that enhanced lower-cost mobile/online account 

opening capabilities could incentivize more financial providers to target underserved 

consumers. Commenters agreed that if fraud risks could be mitigated in the context of mRDC, 

the potential to lower the cost for the providers and help underserved consumers access lower 

cost ways to cash checks could be significant. 

Two specific types of products were also highlighted by commenters – virtual prepaid products 

and those that facilitate cash-based electronic transactions – as potentially serving some of the 

financial services needs of underserved consumers. Prepaid products in general are used 
7 CONSUMER FINANCIAL PROTECTION BUREAU 

disproportionately more by unbanked and lower-income households than banked, higher 

income households; comments indicated a significant increase in use of virtual prepaid products 

– that is, prepaid products accessed via computer or on a mobile device (without a physical 

plastic card). Comments also suggested that underserved consumers can benefit from products 

designed to help consumers using cash access digital platforms. An example is services that 

enable consumers to initiate a transaction online and complete it with cash at a retail 

establishment.

Industry comments were split over whether and how much the mobile 

channel can reduce their costs 

Banks and some credit unions pointed to the “additive” nature of mobile financial services and 

the additional costs to develop and maintain the channel, including significant technical and 

other customer service support. Several comments related that this is especially true for smaller 

financial institutions that may find it very difficult to support new technology and systems to 

support the technology. Some nonbank providers who commented seemed to lean more in the 

direction of mobile being a cost savings channel. Some comments reported that using the 

mobile channel has helped providers reduce costs for products targeting the underserved. 

Privacy and security concerns – real or perceived – pose barriers and risk

Comments indicated that real and perceived privacy and security concerns remain a significant 

barrier to adoption of MFS. Commenters cited concerns about access to and security of 

financial account and personal information, security of transaction-specific information, 

online/mobile fraud and scams, and security related to the devices used for MFS, including loss 

or theft. Consumers managing limited resources are also less able to absorb financial losses or 

interruptions that may result from security-related problems. 

More transparency, protections and consumer control may be needed 

around use of consumer data

Comments across the stakeholder spectrum highlighted as unique to mobile financial services 

the amount and type of data collected, used and shared. Consumers are often required to 

provide this data, commenters pointed out, in exchange for accessing the services, products or 

information. Several commenters discussed the benefits of data for linking consumers to 

products and services at lower cost and reducing fraud. Some of these commenters pointed to 

the risks associated with personal, location, financial and other data all connected to the 
8 CONSUMER FINANCIAL PROTECTION BUREAU 

consumer through the device. The potential risks identified in comments include disparate 

impacts in marketing, underwriting and other decision-making processes; and the potential for

“virtual segregated neighborhoods” that would continue to limit access to affordable and safe 

products for underserved consumers. 

Several comments pointed to the numerous entities involved in the opaque mobile financial 

services ecosystem. Some suggested a need to clarify, or develop new, protections to ensure 

transparency, and oversight and accountability of those entities that provide information that is 

used to market to or make decisions about consumers. Some commenters urged clearer privacy 

policies and opt-in processes for consumers as well as accountability by all entities in the mobile 

payment chain.

Digital access and digital financial literacy need to be improved for mobile 

to be an effective channel for underserved consumers

Commenters discussed challenges related to accessing digital channels as well as the need for 

digital financial literacy. Comments pointed out that while many think smartphones and 

devices are a growing necessity, the cost of devices and data plans, as well as lack of service in 

some geographic areas, can leave many behind. Many commenters highlighted the need for 

efforts to enhance digital financial literacy in addition to broader digital and technological 

literacy. Comments identified key challenges for underserved consumers including those with 

disabilities and older adults, around language access, screen size and adaptability, and lack of 

comfort with using mobile technology.

Comments noted that mobile financial services will not help underserved consumers who don’t 

know about them or don’t know how to use them safely and effectively. Education, outreach and 

marketing are always needed to attract underserved consumers but it appears even more critical 

with mobile, where the most difficult link for industry to make with consumers may be the link 

to the technology itself. Comments identified efforts focused on 1) enhancing affordable access 

to the technology and 2) educating consumers and intermediaries about the safe and effective 

use of the technology for accessing financial services, products and personal financial 

management tools as key to making MFS a way to reach more underserved consumers and help 

those consumers achieve their financial goals. 
9 CONSUMER FINANCIAL PROTECTION BUREAU 

Policymaking should be widely informed 

Comments varied as to whether and to what extent additional consumer protections are needed 

in the area of mobile financial services. There was general consensus, however, that there are a 

wide array of stakeholders, including the CFPB, other financial regulatory agencies, the Federal 

Communications Commission (FCC), the Federal Trade Commission (FTC), state regulatory 

bodies, other regulatory organizations and others. Comments suggested that any regulator 

acting in this area should act with certainty but should not choose technological winners and 

losers as the mobile financial services landscape is continuing to evolve. 

Some commenters encouraged the CFPB and other agencies to continue to work to better 

understand both the risks, including those associated with data collection and use, and the 

entities involved in the mobile financial services ecosystem. 
10 CONSUMER FINANCIAL PROTECTION BUREAU 

1. About this report

A major development in the consumer financial services market over the past few years has been 

the increasing use and proliferation of mobile technology to access financial services and 

manage personal finances. For example, in 2013, 74,000 new customers a day began using 

mobile banking services.11 Using a mobile device to access accounts and pay bills can reduce 

cost and increase convenience for consumers. By enabling consumers to track spending and 

manage personal finances on their devices through mobile applications or text messages, mobile 

technology may help consumers achieve their financial goals. For economically vulnerable 

consumers, mobile financial services accompanied by appropriate consumer protections can 

enhance access to safer, more affordable products and services in ways that can improve their 

economic lives.

In order to learn more about opportunities, challenges and risks associated with the mobile 

financial services market, especially for underserved consumers (i.e. unbanked and low-income 

consumers) and other economically vulnerable consumers12 – the Bureau’s Office of Financial 

Empowerment issued a Request for Information on June 11, 2014. The RFI used the term 

“mobile financial services” (MFS) to cover mobile banking services and mobile financial 

management services. The RFI was not intended to address mobile point-of -sale (“POS”) 

payments, except with respect to mobile payment products that are targeted specifically at 

underserved consumers. 

 

11 Javelin Strategy and Research, Mobile Banking, Tablet and Smartphone Forecast 2013-2018: Smart Device

Adoption Drives Mobile Banking Boom in 2013, March 2014 (95 million U.S. adults used mobile banking – a gain

of 27 million mobile bankers over 2012, or 74,000 per day) available at 

https://www.javelinstrategy.com/brochure/318/

12 The term “underserved” for purposes of this report includes low-income, underbanked, unbanked, economically 

vulnerable, and traditionally underserved consumers as well as consumers with thin or no credit file.
11 CONSUMER FINANCIAL PROTECTION BUREAU 

The purpose of the RFI was to inform the Bureau’s consumer financial education and 

empowerment strategies related to developments in these areas. We received more than 50

comments from individuals, financial services providers, financial institutions, regulators, trade 

associations, research and consulting firms, academics, nonprofits, and consumer advocacy 

organizations. While several trade associations submitted comments, we received few 

comments from individual financial institutions and providers. 

The purpose of this report is to describe the responses by the commenters to help inform the 

discussion around 1) identifying the scope and types of mobile financial services available with a 

focus on the underserved; 2) opportunities mobile technology provides for enhancing access to 

financial services and improving financial lives of underserved consumers; 3) challenges, 

barriers and risks to accessing financial products and services via mobile technology; and 4) 

recommendations for how the CFPB might educate and empower consumers in using mobile 

technology for financial services.

Nothing in this report is intended to identify areas in which the Bureau may or will take 

regulatory, supervisory, or enforcement action. Some of the commenters’ views on these topics 

are included where relevant to the particular topic of the discussion. 
12 CONSUMER FINANCIAL PROTECTION BUREAU 

2. Scope of mobile financial 

services for the underserved

The market for and scope of mobile financial services (MFS) is expanding as the use of mobile 

phones, smartphones, and other digital devices increases and the services and products 

designed for mobile evolve rapidly. The use of mobile financial services has risen significantly 

throughout the general population but, with some exceptions, has yet to see the same adoption 

by underserved consumers, despite the fact that many rely on smartphones as their primary or 

only access to the internet. However, according to several commenters, once connected, many 

underserved consumers are more likely than others to use mobile to access those services. 

2.1 Mobile and the underserved

There are many efforts, including by financial providers and community organizations, to reach 

underserved populations to help either bring them into the traditional banking system or 

enhance their access to safe and affordable financial services from nonbank providers. Mobile 

financial services are one potential way to help to achieve these goals.

Mobile phone use among underserved populations is significant, and for many in this 

population is the primary way to access the internet. The MFS survey by the Federal Reserve 

Board, Consumers and Mobile Financial Services 2015 [hereinafter FRB 2015 Mobile Survey], 

conducted in 2014, shows 90 percent of underbanked consumers had access to mobile phones 
13 CONSUMER FINANCIAL PROTECTION BUREAU 

and 68 percent had access to smartphones. 13 Unbanked consumers’ access to mobile phones 

(67 percent) and smartphones (44 percent) was also significant.14 The percentage of unbanked 

consumers with access to smartphones rose from 35 to 44 percent between 2013 and 2014.15

Other estimates provided in the comments suggest even higher levels of smartphone use among 

the unbanked individuals. According to Javelin Research and Strategy’s (Javelin) research, 55 

percent of unbanked consumers own smartphones.16 

Among the lower income population generally, mobile phone use is high – Pew Research Center 

(Pew) 84 percent of adults living in households earning less than $30,000 per year have a cell 

phone;17 and 50 percent have a smartphone (compared to 64 percent ownership of a 

smartphone for all American adults).18 

With regard to minorities, Pew found 71 percent of Hispanic adults and 70 percent of nonHispanic black adults had a smartphone, compared to 61 percent of non-Hispanic white adults.19

 

The Federal Reserve Board’s recent survey on mobile financial services also found adoption of 

smartphone use higher among Hispanic consumers (82 percent are mobile phone users) than 

 

13 FRB 2015 MOBILE SURVEY, supra note 1, at 1-2.

14 Id.

15 See FEDERAL RESERVE SYSTEM, CONSUMERS AND MOBILE FINANCIAL SERVICES 2014 1-2 (MARCH 2014) [hereinafter FRB

2014 MOBILE SURVEY](The 2014 report of the survey conducted in 2013 found 69 percent of unbanked consumers had 

access to a mobile phone, approximately half of which were smartphones, so approximately 35 percent of those 

surveyed had smartphones)

16 Javelin, #49, at 3.

17 Pew Mobile Technology Fact Sheet, supra note 1.

18 Pew Smartphone Use in 2015, supra note 1, at 13. The FRB 2015 MOBILE SURVEY found 74 percent of adults living 

in households with less than $25,000 have a mobile phone and 53 percent have a smartphone. 

19 Id.
14 CONSUMER FINANCIAL PROTECTION BUREAU 

among non-Hispanic white consumers (68 percent) but found a lower percentage of smartphone 

use among non-Hispanic black consumers (66 percent).20 

Pew found that 52 percent of adults in rural areas own smartphones.21 Not surprisingly, young 

adults have a high rate of smartphone adoption – 85 percent of individuals between the ages of 

18-29 have smartphones.22 

Reliance on smartphones to access the internet is significant among younger adults, low-income 

households and people of color. The Pew Research Center found 19 percent of Americans rely to 

some extent on smartphones for internet access23 but identified consumers in three categories 

as “smartphone-dependent”, meaning they had neither broadband access at home nor an easily 

available alternative way to access the internet except through their phone:

 Younger adults — 15% of Americans ages 18-29 are heavily dependent on a smartphone 

for online access.

 Those with low household incomes and levels of educational attainment — Some 13% of 

Americans with an annual household income of less than $30,000 per year are 

smartphone-dependent. Just 1% of Americans from households earning more than 

$75,000 per year rely on their smartphones to a similar degree for online access.

 Non-whites — 12% of African Americans and 13% of Latinos are smartphonedependent, compared with 4% of whites.

Pew Research Center, Smartphone Use in 201524

 

20 FRB 2015 MOBILE SURVEY, supra note 1, at 4-5.

21 Pew Smartphone Use in 2015, supra note 1, at 13. 

22 Id.

23 Id. at 2.

24 Id. at 17.
15 CONSUMER FINANCIAL PROTECTION BUREAU 

Netspend, a prepaid card program manager that identified its customer base as low- to 

moderate-income consumers, reported in its comments that almost 85 percent of its 

cardholders reported owning a smartphone.25 Netspend stated that in focus groups its 

customers said that they “maximize their limited incomes by consolidating their phone and 

Internet service to a single source - typically by relying on mobile phone and data plan in lieu of 

home phone and home Internet. With cell phone upgrade plans, such consumers can frequently 

be early adopters of new technology.”26 This is not surprising given that less than half of 

consumers (43 percent) with annual household incomes below $25,000 have access to 

broadband internet at home.27

Though not specific to mobile, Javelin found that 17 percent of underserved consumers switched 

financial institutions, compared with 10 percent of all consumers, in the 12 months preceding 

the date of submission of their comments in September 2014.28 Javelin suggested that these 

consumers “are open to transferring to new financial service providers.”29 Another commenter 

reported that 65 percent of banked customers surveyed indicated mobile banking services 

played an important or extremely important role in their choice to switch financial 

institutions.30 As financial institutions and providers want to build a loyal customer base, how 

and whether mobile maintains that loyalty will affect the way in which companies provide 

financial services. One banking trade association commenter stated that “[t]he prevalence of 

 

25 Netspend, #52, at 3.

26Id. 

27 National Consumer Law Center (NCLC), #35, at 16 citing White House Office of Science and Technology Policy, 

National Economic Council, Four Years of Broadband Growth at 8-9 (June 2013), available at

http://www.whitehouse.gov/sites/default/files/broadband_report_final.pdf. 

28 Javelin #49, at 5. 

29 Id. According to a report in April published by Mercator, approximately 31 percent of young adults and 28 percent 

of other mobile banking users surveyed in 2014 reported a financial institution switch during the past two years, 

compared to 20 percent who reported doing so in 2013. Mercator Advisory Group, Mobile and Tablet Banking: P2P 

Is Driving Growth April 2015, Press Release, available at 

https://www.mercatoradvisorygroup.com/Press_Releases/Mobile_and_Tablet_Banking__P2P_Is_Driving_Grow

th/.

30 Consumer Bankers Ass’n (CBA), #10, at 4 (citing research by AlixPartners).
16 CONSUMER FINANCIAL PROTECTION BUREAU 

mobile phones among such persons [unbanked and underbanked] suggests a particularly 

egalitarian vehicle for bringing access to mainstream bank products and services.”

31

 In its 

comments, Javelin also suggested, “[u]nderserved Americans are fueling demand for new, 

improved methods to monitor and manage their finances – and they won’t necessarily turn to or 

be satisfied with traditional banking products, services, or providers.”32

2.2 Defining MFS and its use

Several of the comments raised the need to define and clarify the meaning of “mobile financial 

services” to avoid confusion and to ensure that public policy discussions take place in the 

context of commonly understood terms and scope. 

For example, the U.S. Chamber of Commerce (Chamber) pointed out potential confusion 

around whether the term depends on the device, the size of the screen, the network connection 

used, the location of the user or some other factor.33 As a result, the Chamber noted, the 

following questions remain unanswered in the context of defining MFS: 

 Whether the term “mobile financial services” exclusively covers financial services 

accessed through cell phones and smart phones, or whether it covers accessing 

financial services with other devices, such as tablets, phablets, wearables, devices 

embedded in cars, laptops, or laptop/tablet hybrids; 

 Whether accessing financial services through any device that connects through a mobile 

network meets the definition of the term “mobile financial services,” whereas accessing 

those same financial services with the same device, but on a WiFi network would not 

meet the definition; or 

 

31 American Bankers Ass’n (ABA), #45, at 1.

32 Javelin #49, at 5.

33 U.S. Chamber #42, at 3-8. 
17 CONSUMER FINANCIAL PROTECTION BUREAU 

 Whether the mobile nature of the user defines the term “mobile financial services,” 

irrespective of the type of device or the nature of the network.

U.S. Chamber of Commerce, #42, at 5-6.

These questions point out the complex nature of the discussion around mobile financial services 

and the need for clarity when engaged in these issues.34 This may be relevant for future 

disclosure or other requirements that may be designed to address a particular channel. 

A related but different perspective of the broader market was provided by U.S. Public Interest 

Research Group and the Center for Digital Democracy, which pointed out that the “online 

industry views the mobile platform as an integral part of a holistic ‘marketing and media 

ecosystem’ ” where the “provision and marketing of financial services on mobile devices are 

integrated into a broader set of industry practices on all digital media.”35 These commenters 

urged the inclusion of issues related to marketing and data of mobile financial services in a 

broader discussion. 

The comments included references to myriad products and technology that pertain to mobile 

financial services. The number and technical nature of the terms suggest a potential value in 

developing common nomenclature around products, technology, channels, and type of use to 

help guide consumers, regulators and industry. 

2.2.1 Mobile Banking

Mobile banking refers to a system or a channel that allows customers of a financial institution to 

conduct financial transactions through a mobile device such as a mobile phone or tablet. Some 

mobile banking can be done via SMS (short message service), or texting, through the mobile 

phone. Other types of mobile banking require access to internet through the financial 

 

34 For example, the ABA, #45, at 3 urged that “[i]n considering the potential for “mobile phones” to expand 

opportunities for the unbanked and underbanked it is important to look beyond just mobile phones and recognize 

in the discussion other easily and commonly transported devices that continue to evolve in terms of capabilities, 

features, ease of use, size and transportability.”

35 U.S. Public Interest Research Group (US PIRG) and Center for Digital Democracy (CDD), #19, at 3 [hereinafter 

PIRG and CDD].
18 CONSUMER FINANCIAL PROTECTION BUREAU 

institution’s website or an app provided through the financial institution or others, e.g., links to 

accounts through money management or account aggregation applications or services.

Mobile banking is on the rise and in demand - it has steadily gained momentum and is 

preferred, according to a study conducted for American Banker Association in 2014, by 10 

percent of bank customers, up from 8 percent in 2013.36 The FRB 2015 Mobile Survey found 

that 39 percent of those with bank accounts had used mobile banking in the previous 12 months, 

compared to 22 percent in 2011; for those with bank accounts who use smartphones, the rate is 

52 percent.37 Deloitte Services LP reported in its comment letter that according to a January 

2014 survey by Deloitte Center for Financial Services, nearly 40 percent of surveyed bank 

customers would bypass branches and interact directly via mobile if offered additional types of 

mobile banking services.38 

The Credit Union National Association (CUNA), in its comments, reported that 23 percent of 

members from the largest credit unions have enrolled in mobile services.39 One credit union

reported that an average of 52 percent of its membership accessed their account via mobile 

device monthly.40 In its comments, CUNA said generally larger credit unions are more likely to 

offer a broader range of mobile financial services, while smaller credit unions continue to 

evaluate whether it is cost effective to provide or expand their mobile services.41

Both the FRB 2015 Mobile Survey of individuals and the Federal Deposit Insurance 

Corporation’s (FDIC) 2013 FDIC National Survey of Unbanked and Underbanked Households 

 

36 ABA, #45, at 2. The ABA stated that the study was conducted by Ipsos Public Affairs, an independent market 

research firm, for the ABA during August 7-12, 2014.

37 FRB 2015 MOBILE SURVEY, supra note 1, at 9.

38 Deloitte #44 at 2, n. 2, citing Mobile Financial Services Survey, Deloitte Center for Financial Services, January 2014. 

According to Deloitte, the online survey included 2,193 responses from a broad cross section of demographic groups. 

All respondents had a bank account and were at least 21 years old.

39 Credit Union National Ass’n (CUNA), #24, at 1-2 (Nearly 60% of the more than 200 credit unions that responded 

to CUNA’s 2014 Technology Spending survey currently offer mobile financial services)

40 Randolph-Brooks Federal Credit Union (RBFCU), #27, at 2.

41 CUNA, #24, at 3.
19 CONSUMER FINANCIAL PROTECTION BUREAU 

[hereinafter FDIC 2013 Survey] found that underbanked consumers had a higher use of mobile 

banking as their primary means to access accounts than the overall population with a deposit 

account.42 For lower income customers, a 2014 survey done by the Deloitte Center for Financial 

Services found that use of mobile is significant - 56 percent of surveyed customers with incomes 

between $25,000 and $49,000 use smartphones to interact with a financial institution, which is 

not that different from higher income users (61 percent for customers with incomes above 

$100,000).43

The potential for managing one’s money via mobile is great. The FDIC 2013 Survey indicated 

two of the three most common mobile banking activities reported for consumers in 

underbanked and fully banked households are monitoring of account balances or recent 

transactions (underbanked - 88.5 percent and fully banked - 85.7 percent) and bill payment (60 

percent for both underbanked and fully banked consumers).44 According to the FRB 2015 

Mobile Survey, 63 percent of mobile banking users reported that they had checked their account 

balance before making a large purchase in the 12 months preceding the survey, and 53 percent 

of them decided not to purchase an item as a result of their account balance or credit limit.45 

Javelin also found underserved46 consumers had higher rates of mobile banking (53 percent vs. 

42 percent in 90 days previous to comment submission) and mobile bill pay than among all 

 

42 FRB 2015 MOBILE SURVEY, supra note 1, at 5 found 48 percent of underbanked had used mobile banking in previous 

12 months compared to 39 percent of all mobile phone owners with bank accounts; 32 percent of the underbanked 

reported making mobile payments in the previous 12 months; FDIC National Survey of Unbanked and 

Underbanked Households 10 (2013) found that among mobile banking users, underbanked households were 

considerably more likely (32.4 percent) than the fully banked (21.6 percent) to use mobile banking as their main 

banking method [hereinafter FDIC 2013 SURVEY]. 

43 Deloitte, #44, at 5.

44 FDIC 2013 SURVEY, supra note 42, at 61.

45 FRB 2015 MOBILE SURVEY, supra note 1, at 25. 

46 Javelin, #49, at 5 defines underserved as consumers who lack a checking account or have used alternative financial 

services in past 12 months, which is different from definitions used by the Federal Reserve Board in its survey: 

unbanked (not having a bank account) and underbanked (having a bank account but also using an alternative 

financial service such as a money order, check cashing service, pawn shop loan, auto title loan, paycheck 

advance/deposit advance, or a payday loan) FRB 2015 MOBILE SURVEY, supra note 1, at 5 or the FDIC in its survey: 
20 CONSUMER FINANCIAL PROTECTION BUREAU 

consumers (33 percent v. 22 percent).47 On the other hand, the Alliance for Stabilizing our 

Communities (ASOC) reported that its Banking in Color: New Findings on Financial Access for 

low- and Moderate-Income Communities survey found though 59 percent of the respondents 

had internet access via phone, only 17 percent used it for mobile banking and only 11 percent of 

respondents reported they were comfortable with conducting financial transactions online or on 

their mobile phone, citing security most often as the concern when banking via the use of the 

smartphone.

48 This contrasts with comments from the Consumer Bankers Association, which 

reported a study by Alix Partners that showed non-Caucasian banked customers were more 

likely to use mobile banking than their Caucasian counterparts (52 percent for Hispanic 

customers, 41 percent for African American customers, and 38 percent for Asian customers, 

versus 28 percent for non-Hispanic Caucasian customers).49 

As suggested in comments, this use is significant but there is still untapped potential.50 MFY 

Legal Services, which provides legal services to low-income and other vulnerable consumers in 

New York City, commented that mobile access, which would allow clients to check their account 

balances anywhere, could be a benefit as “they are more likely to avoid purchases that overdraw 

their accounts and lead to overdraft fees.”51 MFY Legal noted, however, that “simply because 

people have technology does not mean they know how to use it, or use it safely.”52 

According to financial industry members, because the acquisition channel is so important to 

developing an ongoing customer relationship, successful account opening strategies are very 

 

underbanked households (having an account, but have also obtained financial services and products from non-bank, 

alternative financial services (AFS) providers in the prior 12 months) FDIC 2013 SURVEY, supra note 42, at 4.

47 Javelin, #49, at 6.

48 Alliance for Stabilizing our Communities (ASOC) #40 at 5, 7. ASOC is a collaboration between National CAPACD 

(Coalition of Asian and Pacific Americans for Community Development), the National Council of La Raza, and the 

National Urban League. 

49 CBA, #10, at App. 2.

50 See, e.g., FRB 2015 MOBILE SURVEY, supra note 1, at 5 (gradual rise in mobile payments by smartphone users 

suggests smartphone adoption substantially contributed to the increased use of mobile payments.)

51 MFY Legal Services, #17, at 2.

52 Id.
21 CONSUMER FINANCIAL PROTECTION BUREAU 

important for financial institutions. The Center for Financial Services Innovation (CFSI) 

commented that it identified two services that allow consumers to open an account directly from 

their mobile device.53 A credit union reported that members can open accounts via mobile 

device.54 Some comments raised the issue of KYC (know-your-customer) and AML (anti-money 

laundering) rules as barriers to mobile and online account opening. Comments noted that 

although innovative products may be designed to assist with account opening, it remains 

difficult to comply with the rules through an online channel, e.g., gathering the information to 

validate a customer’s identity.55 But one comment noted that “innovations including photo 

recognition of common forms of identification should improve this situation in the next several 

years.”56 

Many respondents highlighted the potential of mobile Remote Deposit Capture (mRDC) to help 

underserved bank customers and attract unbanked consumers to the banking system.57 Mobile 

Remote Deposit Capture (mRDC) allows consumers to take a photo of and deposit a check 

remotely via their mobile device. As one commenter noted: “To date, this has perhaps been the 

most transformational mobile development for the underserved because it overcomes the 

limitations of branch hours and locations.”58 It has the potential to save time and reduce costs 

for the 38 percent of the unbanked households that use nonbank check cashing services,59 which 

the Center for American Progress (CAP) noted may charge as much as 2 to 5 percent of the 

 

53 CFSI, #6. at 4.

54 RBFCU, #27 at 2. 

55 ABA, #45, at 17; One Financial, #33, at 6.

56 One Financial, #33, at 6. See also, CFSI, #6, at 3 (There are software programs that enable financial institutions to 

use device features such as the camera, the GPS locator to execute know your customer protocols for account 

opening or loan applications.)

57See, e.g., ABA, #45, at 7-8; CBA, #10, at 5; CFED, #26, at 5. Susan Burhouse, Matthew Homer, Yazmin Osaki and 

Michael Bachman, FDIC, Assessing the Economic Inclusion Potential of Mobile Financial Services 24 ( 2014) 

[hereinafter FDIC Staff Paper] (as of 2013, 77 percent of the 25 largest banks offered mRDC, and about 25.7 percent 

of mobile banking users have used mRDC in the previous 12 months).

58 Center for American Progress (CAP), #34, at 1-2.

59 FDIC Staff Paper, supra note 57, at 25.
22 CONSUMER FINANCIAL PROTECTION BUREAU 

check value. 60 According to the FRB 2015 Mobile Survey, 51 percent of mobile banking users 

surveyed said that they had deposited a check electronically using their phone camera.61

Though the benefits may be significant, a number of comments raised issues that might make 

banks wary of offering mRDC to all customers, and might make mRDC not as appealing for all 

consumers. These included: 

 Fraud: The ABA, in its comments, stated that “quick access to funds via RDC deposits 

presents fraud risks.”62 The ABA cited the risk that a check could be deposited more 

than once or might be forged or fake as one of the reasons for the lag between deposit 

and access. 

 Delay in access to funds: The report, Assessing the Economic Inclusion Potential of 

Mobile Financial Services [hereinafter FDIC Staff paper], issued by staff of the FDIC in 

June 2014, noted that banks typically require consumers to wait a period of time before 

their remotely deposited funds become available for withdrawal.63 Commenters stated 

that they think institutions hold checks deposited remotely because it is not clear to them 

whether Regulation CC funds availability rules apply, and because of the fraud risk 

inherent in RDC (described in the previous paragraph).64 Research by Consumers Union 

confirmed reports from consumers about delay of funds issues with mRDC, finding that 

checks deposited via mRDC into accounts at one bank took 10 days to become 

available.

65 Consumers Union noted that the potential to attract customers away from 

higher priced check cashing services may be limited as “RDC may not satisfy the 

need/want of many of the unbanked – and underbanked – to have immediate access to 

 

60 CAP, #34, at 2.

61 FRB 2015 MOBILE SURVEY, supra note 1, at 12.

62 ABA, #45, at 14.

63 FDIC Staff Paper, supra note 57, at 24.

64 NCLC, #35, at 19; Consumers Union, #30, at 6.

65 Consumers Union, #30, at 6. The comment refers to time “to clear,” but in context, it appears to refer to the time 

when funds become available to the depositor.
23 CONSUMER FINANCIAL PROTECTION BUREAU 

funds or cash.”66 In contrast, the ABA suggested that “[e]fforts to improve the payment 

system to make it faster and more efficient will further reduce and perhaps eliminate the 

need for holds.”67 

 Different regulations apply: At least one comment noted that checks deposited via mRDC 

may be subject to different laws and regulations than checks deposited by traditional 

means.

68

 Errors from the quality of the image itself: One commenter noted that errors from the 

quality of the image captured by consumers may affect low-income consumers more 

than others because they may have cheaper, inferior phones and cameras.69 If there is a 

blurred image, the amount of the check may be erroneously recorded. Comments noted 

that this could cause serious consequences such as overdraft and other fees that may 

result from such errors.70

 Problems when the original check is not destroyed: If the original check is not destroyed, 

comments suggested, there is risk that it may be deposited again. If a check is deposited 

more than once there may be a double debit to the account of the customer who wrote 

the check and a payee who accidentally deposits a check more than once may think he 

has more money available than he does.71 This too might lead to insufficient funds or 

other types of fees.72

 

66 ABA, #45, at 8. 

67 Id. at 19.

68 Mark Budnitz, Georgia State University School of Law (Budnitz) #48, at 1-3. 

69 Id.

70 Id.

71 Id. 

72 Id.
24 CONSUMER FINANCIAL PROTECTION BUREAU 

Comments reported that financial institutions often offer fee-based options to get faster access.73 

For example, according to comments from the Consumer Bankers Association, one bank charges 

its customers who deposit checks through mRDC - 50 cents for funds availability within two 

business days, $3 for funds availability the same night, and 1 percent to 3 percent of the check 

amount for immediate funds access, with a $5 minimum fee.74 One comment suggested that if 

institutions develop mobile systems that enable consumers to deposit checks without paying a 

fee before the check has cleared, that may help move consumers away from higher priced check 

cashing services.75 

2.2.2 Personal financial management tools

Personal financial management (PFM) tools are available online not only via websites, but also 

via mobile applications. Some “alerts” and other tools use text messaging that can be received 

on a smartphone or other cell phone. (See Texting discussion below) 

These tools provide a variety of services, such as aggregating account information, sending alerts 

and reminders about balances and bill payments, and tracking and reporting on spending 

habits. CFSI noted that of the 900 mobile applications it reviewed for personal financial 

management capabilities “there are relatively few apps that focus on savings goals or debt 

reduction.”76 Intuit, however, claimed that users of its product, Mint.com, a money 

management software system that aggregates accounts and helps consumers establish 

individualized savings goals and set up alerts, are saving over $1 billion per month towards their 

goals.77

 

73 CBA, #10, at 5; CFSI, #6, at 9. 

74 CBA, #10, at 5. 

75 NCLC, #35, at 23.

76 CFSI, #6, at 2.

77 Intuit, #21, at 12. According to a recent posting on Mint.com website, Mint has more than 20 million registered 

users. http://blog.mint.com/news/the-time-is-now-mint-available-on-apple-watch041515/ accessed online May 27, 

2015. The number of active users, however, would presumably be lower.
25 CONSUMER FINANCIAL PROTECTION BUREAU 

Commenters noted that when consumers can access more than one type of account via mobile 

they can make an informed decision about when and whether to switch from a debit to a credit 

method for their purchase.78 Such features help in managing accounts and possibly avoiding 

fees. However, commenters raised issues about privacy and security in these situations as 

discussed at pp. 53-62. 

Evidence suggests that underserved consumers use and value alerts as a key function of their 

mobile financial service. According to the FRB 2015 Mobile Survey, 57 percent of mobile 

banking users received an alert in the previous 12 months.79 Javelin found that while 86 percent 

of all mobile bankers receive email alerts, 93 percent of underserved mobile bankers received 

alerts.80 CFSI reported that consumers who use one MFS app that also offers users transaction 

accounts issued by a bank check their account three to five times per day.81 

Netspend, which noted that it has 3.4 million active prepaid cards, commented that between 55-

65 percent of its GPR cardholders and 40-45 percent of its payroll cardholders are enrolled in its 

alerts program, and 150,000 unique users use Netspend’s smartphone apps per month.82 The 

company stated that its customers, many of whom maintain low average balances – typically 

less than $100 on any given day - “closely and actively manage their accounts.”83

CFED (Corporation for Enterprise Development) stated that while MFS has many potential 

benefits for low-income consumers, more product development and innovation is needed to 

meet some of their unique needs. For example, financial management software may not be able 

to accurately capture payments such as government benefits and tax credits, which “limits their 

 

78 Appleseed, #41, at 8; PayPal, #29, at 2. 

79 FRB 2015 MOBILE SURVEY, supra note 1, at 12.

80 Javelin, #49, at 7.

81 CFSI, #6, at 3.

82 Netspend, #52, at 1-2.

83 Id. at 2.
26 CONSUMER FINANCIAL PROTECTION BUREAU 

ability to help users review their finances to make decisions in real time and plan ahead with an 

understanding of what their resources will be in the future.”84

One use of personal financial management tools is in the area of credit scores. Knowledge and 

understanding of credit scores can be very useful for consumers because improved credit scores 

are associated with greater access to a variety of credit products and lower cost credit. One 

commenter discussed a credit score/credit report card mobile app it provides to its customers 

and reported that its members in “very poor,” “poor,” and “fair” (according to the credit score it 

uses) who check the credit scores on its app on a regular basis showed higher credit scores 

than members with the same credit score ratings who check their credit scores less frequently.

85

 

As the market moves in the direction of providing free credit scores on credit card and other 

types of account statements provided by lenders to consumers, credit score mobile apps may 

have a broader positive impact for consumers with lower scores.

2.2.3 Text messaging

Commenters highlighted the importance of text messaging to low-income bank customers. They 

noted that many low-income consumers do not have smartphones; text messaging is one of the 

only ways for them to benefit from alerts and push notifications from financial services 

providers.86 Texting was viewed as an important yet untapped function to enable consumers to 

set up alerts and track their accounts. One commenter suggested that providers could use texts 

to “nudge their more at-risk consumers ... into better financial behavior”87 but noted that any 

tradeoffs with regard to fees charged would need to be explored.88

 

84 CFED, #26, at 3-4.

85 Credit Karma, #32, at 4.

86 Intuit, #21, at 19, recommended that CFPB consider the opportunities available to consumers through texting 

because it may “provide real-time information to consumers in a way that they are most likely to read.” 

87 PIRG and CDD, #19, at 9-10.

88 Id.
27 CONSUMER FINANCIAL PROTECTION BUREAU 

One commenter noted that “text-based mobile financial services may also offer greater 

opportunities in serving the unbanked.”89 According to comments from One Financial Holdings 

Group (One Financial), some providers noted measurable changes in consumer spending habits, 

“based purely on post-transaction, real-time text-messaging to increase awareness of spend and 

spend patterns.”90 

One commenter reported examples of nonprofits successfully using SMS as their primary 

engagement platform with their customers, adopting the target audience’s preferences to better 

reach them.91 ASOC reported that its local affiliates have begun to utilize texting to reinforce 

personal financial goals and action plans developed by the client through their financial 

coaching process and to provide ongoing encouragement as part of their financial capability 

program.92

While many comments acknowledged the use of texting and its benefits,93 some industry 

commenters objected that the Telephone Consumer Protection Act (TCPA) requires consumer 

permission before text messages are sent to a consumer.94 The American Financial Services 

Association (AFSA) cited litigation risk and disclosure requirements (perceived as difficult to 

 

89 Deloitte, #44, at 19.

90 One Financial Holdings Group, (One Financial), #33, at 5 (One Financial Holdings Group is a “laboratory for 

innovation in financial services focusing on the underserved, funded by a consortium of the most prominent earlystage financial services investors in the United States.” In its comments, it stated that one provider saw changes 

within one month of adoption). 

91 Deloitte, #44, at 19. 

92 ASOC, #40, at 7.

93 See, e.g., CUNA, #24, at 3 (reported that half their credit unions offered SMS/text messaging). 

94 ABA, #45, at 16; American Financial Services Association (AFSA), #18, at 4. On July 1oth, the Federal 

Communications Commission (FCC) issued a declaratory ruling reaffirming that the TCPA applies to text messages 

and that consumer consent therefore is generally required. FCC, TCPA Omnibus Declaratory Ruling and Order, 

FCC 15-72 (July 10, 2015)[hereinafter FCC Declaratory Ruling and Order].
28 CONSUMER FINANCIAL PROTECTION BUREAU 

meet because texts have character limits) as two challenges their members face when providing 

texting services.95 

Some industry commenters stated that the cost of TCPA compliance, uncertainty regarding 

whether certain activity complies with the TCPA, and the risk of liability are all factors that 

discourage banks from investing more in text messaging, “especially as text is viewed as an 

interim system as people move to smart phones.”96 Deloitte Services LP, in its comments, also 

stated that the prospects for texting are limited “given the dramatic rate of change in technology 

and reduction in price, it may not make sense to invest heavily in text banking.”97 The National 

Consumer Law Center (NCLC) shared its viewpoint that many providers may not be complying 

with Electronic Signatures in Global and National Commerce (ESIGN) Act,98 which requires 

consumer consent in order to deliver certain communications electronically.99 

2.2.4 Mobile applications

Many financial products and services, including financial management services, are accessed 

through applications on mobile devices. 

In its review of nearly 900 financial apps, a substantial proportion of which were personal 

financial management (PFM) apps, CFSI found most are available free of charge.100 According 

to CFSI, some apps had been downloaded more than 10 million times, while others were 

 

95 AFSA, #18, at 4.

96 ABA, #45, at 17. Though smartphones also have texting capability, data plans on smartphones allow consumer and 

providers to communicate in additional ways. 

97 Deloitte, #44, at 19.

98 The Electronic Signatures in Global and National Commerce (ESIGN) Act 15 U.S.C. §7001 et seq addresses 

requirements for electronic records and signatures.

99 NCLC, #35, at 15-18.

100 CFSI, #6, at 2 (these were “popular financial apps independent of those related to bank and GPR accounts”.)
29 CONSUMER FINANCIAL PROTECTION BUREAU 

downloaded fewer than 10,000 times.101 But CFSI remarked that there is virtually no data on 

use patterns, length of engagement and retention, or on consumer financial outcomes as a result 

of using the apps.102 It is also not known how downloads correlate with actual use.

Some commenters cited problems with some money management and other apps that include a 

failure to disclose whether a fee applies to a particular transaction, a failure to provide required 

disclosures before the app is downloaded or alerts are activated, requiring consumers to visit the 

website to find out the terms and conditions, and a lack of uniform terminology among 

providers.103 One commenter stated that consumers should have access to disclosures before 

they enroll in a service or download an app and suggested that consumers should see a simple 

box display with any fees before being asked to provide any personal information or download 

an app.104

One commenter raised concerns about the impact of cell phone service providers moving away 

from providing unlimited data in mobile phone plans, suggesting that such a change may limit 

the ability of low-income consumers to comparison shop via mobile because such activity uses a 

lot of data.105 Another commenter, however, suggested an increasing availability of prepaid 

phone plans and unlimited data plans at reduced prices as a positive trend.106 In addition, for 

mobile users mobile apps are increasingly becoming the way some consumers access their 

 

101 Id.

102 Id.

103 See Consumers Union, #30, at 2-4; Staff of the Bureau of Consumer Protection, Federal Trade Commission (FTC), 

#11, at 7-8. FTC cited staff recommendations from its report, FED. TRADE COMM’N, WHAT’S THE DEAL? A FTC STUDY 

ON MOBILE SHOPPING APP, (Aug. 2014), available at http://www ftc.gov/system/files/documents/reports/whatsdeal-federal-trade-commission-study-mobile-shoppingapps-august-2014/140801mobileshoppingapps.pdf, 

including that companies clearly describe how they collect, use and share consumer data so that consumers can 

make informed choices about the apps they use. 

104 Consumers Union, #30, at 2-4.

105 NCLC, #35, at 23.

106 One Financial, #33, at 3, 9.
30 CONSUMER FINANCIAL PROTECTION BUREAU 

deposit accounts.107 Commenters noted concerns about the privacy and security of data shared 

with apps, one stating that account access apps are not all the same in functionality or in level of 

security or privacy protections.108 

2.2.5 Prepaid products 

Prepaid products are typically loaded with funds by a consumer or by a third party, such as an 

employer. Consumers can use these products to make payments, store funds, get cash at ATMs, 

receive direct deposits and tax returns, and send funds to other consumers, among other things. 

Prepaid products are often purchased by consumers at retail stores or online. Prepaid products 

are amongst the fastest growing types of consumer financial payment products in the United 

States.109 For example, according to one estimate the amount of money consumers loaded onto 

“general purpose reloadable” prepaid cards grew from less than $1 billion in 2003 to nearly $65 

billion in 2012.110

One commenter noted that the increasing use of prepaid products, including via mobile devices, 

among unbanked and underbanked consumers demonstrates a willingness to use alternative 

products.111 CFSI’s market size report for 2013 found a 30 percent increase in growth in volume 

between 2012 and 2013 (to $84.3 billion) in GPR prepaid cards.112 The FDIC 2013 Survey found 

 

107 See, e.g., FRB 2015 MOBILE SURVEY, supra note 1, at 12 (Mobile banking users appear to be using mobile 

applications to conduct their banking transactions, as 71 percent of mobile banking users have installed their bank’s 

application on their phones.)

108 ASOC, #40, at 5; FTC, #11, at 7-8; Privacy Rights Clearinghouse, #31, at 2.

109 See generally Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending 

Act (Regulation Z), 79 Fed. Reg. 77101 (Dec. 23, 2014).

110 Id. Citing to projections by the Mercator Advisory Group, which estimated that the amount loaded onto GPR cards 

grew from less than $1 billion in 2003 to nearly $65 billion in 2012.

111 Javelin, #49, at 5. See also Association for Neighborhood and Housing Development, Inc. (ANHD), #12, at 3. 

112 Center for Financial Services Innovation (CFSI), 2013 Financially Underserved Market Size 6 (December 2013) 

available at http://www.cfsinnovation.com/CMSPages/GetFile.aspx?guid=c032e4aa-039b-4723-8f2d-4fbf7fc0eb19

(CFSI in the market size report defined a GPR card as “An open-loop card which serves as an account where 

consumers can load, store and spend funds electronically.”).
31 CONSUMER FINANCIAL PROTECTION BUREAU 

that in 2013, the use of GPR cards was more common among lower income, unbanked and 

underbanked households.113 Specifically, it found that more than a quarter (27.1 percent) of 

unbanked households had used a prepaid account, compared with 19.6 percent of underbanked 

households and 8.8 percent of fully banked households.114 More than a quarter (28.3 percent) of 

unbanked consumers in households with incomes between $30,000 and $50,000 reported 

using prepaid cards whereas only 13.7 percent of those earning $75,000 or over reported using 

them.115 The increased use of prepaid cards by unbanked and underbanked consumers was 

noted by Javelin in its comment letter, which reported that in the 12 months preceding its 

comment submission, 43 percent of underserved consumers had used prepaid cards for 

purchases, versus 28 percent of all consumers.116 

Some prepaid products that target the lower-income market provide consumers with the ability 

to access a savings account or set-aside account, and some provide check writing services.117 

Also, comments noted that some consumers who cannot get bank accounts because of 

blemished reports with specialty consumer reporting agencies that provide checking account 

screening services may find providers of prepaid, often accessed via mobile device, more willing 

to take them as customers.118

The Network Branded Prepaid Card Association (NBPCA) stated in its comment that its 

members had a “significant increase in the issuance of virtual prepaid card products which can 

be accessed through a mobile device.”119 They noted that the physical prepaid card had served as 

a replacement for the check and today “disbursement is increasingly being handled through 

 

113 FDIC 2013 SURVEY, supra note 42, at 29.

114 Id.

115 Id. at 33.

116 Javelin, #49, at 6.

117 See generally ELISA TAVILLA, FEDERAL RESERVE BANK OF BOSTON, HOW MOBILE SOLUTIONS HELP BRIDGE THE GAP:

MOVING THE UNDERSERVED TO MAINSTREAM FINANCIAL SERVICES (DECEMBER 2013).

118 Consumers Union, #30, at 4-5.

119 Network Branded Prepaid Card Association (NBPCA), #13, at 3.
32 CONSUMER FINANCIAL PROTECTION BUREAU 

mobile applications and virtual prepaid products.”120 One industry commenter reported that 

while it sees a mobile app usage rate of only 10 percent among active consumers of GPR prepaid 

cards, an increasing number of prepaid card program managers are providing customers with 

the ability to access and manage their finances via mobile application and there is a steady 

growth in usage by prepaid cardholders.121 The commenter noted that several card providers 

tend to market to lower-income consumers.

122

 

The ABA stated that “[m]obile banking features, when coupled with prepaid cards, show 

promise to attract the unbanked to bank products.”123 It highlighted the prepaid product it has 

endorsed, which it said allows users to access their account via a mobile application, in 

discussing the potential benefits for potential unbanked customers of using prepaid and mobile 

together.124 

A consumer group noted that some prepaid cards are marketed more like an application than a 

card, with the expectation that consumers will manage their account via mobile or online.125 It 

also suggested that protections may vary among debit and credit cards, which can be confusing 

for consumers when they are accessing those cards through one device.126 The commenter 

suggested that there should be more uniformity and clarification of consumer financial 

protections as they apply to prepaid and other products that are accessed via mobile device.127 

 

120 Id. Also, the ABA noted that a key feature of their prepaid card, which more than 170 member banks have issued 

over 200,000, was the ability of users to access account information online via a mobile app. (ABA, #45, at 20-21). 

121 One Financial, #33, at 3-4.

122 Id. at 5.

123 ABA, #45, at 8 (citing as support Elisa Tavilla, Federal Reserve Bank of Boston, How Mobile Solutions Help Bridge 

the Gap: Moving the Underserved to Mainstream Financial Services (December 2013)) 

124 Id. at 19-20 (More than 170 ABA member banks have issued over 200,000 of the ABA endorsed prepaid cards).

125 Consumers Union, #30, at 4.

126Id. at 4-5.

127 Id. at 6-8.
33 CONSUMER FINANCIAL PROTECTION BUREAU 

2.2.6 Mobile payments

In this report, the term “mobile payments” refers to mobile point-of-sale (mPOS) payments

made through a mobile device. Using mobile payment (m-payment), a consumer with a mobile 

device can pay for purchases in a retail store or restaurant through a point-of-sale terminal. 

Bank accounts, credit cards, debit cards, and prepaid cards can be accessed through the 

consumer’s device, often through a “digital wallet.” The most common models of retail 

contactless payments terminals require consumers to “tap-and-pay” by waving the mobile 

device across the terminal or to use a Quick Response (QR) or other readable code at the POS. If 

a terminal accepts near-field communication (NFC)-based payments,128 communication allows 

for information to travel across to the terminal without the devices having to touch each other. 

Loyalty cards, insurance member cards, coupons, boarding passes, tickets and many other types 

of information can also be added to the associated mobile wallet. Digital wallets offer varying 

levels of security. For example, some require biometrics for authentication purposes.129 Some 

examples of digital wallets that facilitate m-payments include Android Pay and Apple Pay.130

Appleseed, which works with immigrant communities, commented that “[i]nnovations in 

mobile payment services, the development of mobile wallets, and the introduction of personal 

money management tools and applications have effectively transformed how some individuals

manage their money and may have ramifications for broad scale use by underserved 

communities, including immigrants.”131 Another commenter noted that experience in other 

 

128 Near field communication (NFC), according to NearFieldCommunication.org, is a technology that allows a device, 

known as a reader, interrogator, or active device, to create a radio frequency current that communicates with 

another NFC compatible device or a small NFC tag holding the information the reader wants. Passive devices, such 

as the NFC tag in smart posters, store information and communicate with the reader but do not actively read other 

devices. Peer-to-peer communication through two active devices is also a possibility with NFC. This allows both 

devices to send and receive information. http://www.nearfieldcommunication.org/about-nfc.html

129 See Deloitte, #44, at 15; Gemalto, #37, at 4; Netspend, #52, at 7.

130 Android Pay and Apple Pay are payment systems provided by Google and Apple that allow users to store various 

credit and debit card payment and other information, and make payments via their devices.

131Appleseed, #41, at 2. (Appleseed is a nonprofit network of 17 public interest justice centers in the United States 

and Mexico) 
34 CONSUMER FINANCIAL PROTECTION BUREAU 

countries suggests that mobile payments could facilitate financial access in this country as 

well.132

The Federal Reserve Board’s 2014 survey found, conditional on owning a mobile phone, 

minorities are more likely to adopt mobile payments (the Federal Reserve Board’s definition of 

which includes bill payments).

133

 The Federal Reserve Board found Hispanic consumers 

accounted for 32 percent of all mobile payment users relative to 22 percent of all mobile phone 

users.134 For non-Hispanic black consumers, the rate was higher – 34 percent of those with 

mobile phones made mobile payments.135

2.2.7 Mobile carrier billing

Mobile carrier billing enables consumers to charge goods or services directly to a mobile phone 

account. The consumer is billed through her mobile carrier and charges show up on her 

statement from the mobile carrier or telecommunications firm. The FTC commented that it is a 

payment method that “may be useful for consumers who do not have credit cards, or do not 

want to use them, especially for small transactions. In this way, carrier billing may be especially 

beneficial for unbanked and underbanked consumers.”136 However, commenters identified 

important potential problems with mobile carrier billing for the underserved.

137

 Reasons cited 

by commenters for caution include fraud, the potential lack of adequate error resolution 

procedures, and impact on credit reports and scores from unpaid bills in dispute.138 The FTC 

 

132 Deloitte, #44, at 20.

133 FRB 2015 MOBILE SURVEY, supra note 1, at 14-18.

134 Id. at 15. 

135 Id.

136 FTC, #11, at 5; NCLC, #35, at 7; Consumers Union, #30, at 9-10.

137 Id. at 1, 5-6; ABA, #45, at 22, NCLC, #35, at 7; Budnitz, #48, at 3-4.

138From its report from a workshop, FED. TRADE COMMISSION, MOBILE CRAMMING: AN FTC ROUNDTABLE (MAY 2013),

the FTC recommended that: (1) mobile carriers give consumers the option to block all third-party charges on their 

phone accounts; (2) market participants take appropriate action so that advertisements for products or services 
35 CONSUMER FINANCIAL PROTECTION BUREAU 

estimates that consumers have lost millions due to mobile cramming – the unlawful practice of 

placing unauthorized third-party charges on mobile phone accounts.139 

2.2.8 Mobile P2P

One area of fairly rapid adoption is mobile person-to-person money transfers (such transfers are 

sometimes included in “mobile payments”).140 Consumers can send money directly to others 

through email or texts or mobile applications. This service is provided by banks, credit unions 

and through other product providers (e.g., PayPal, Square). Some comments discussed the 

potential benefits of person-to-person for providing a less expensive and more convenient 

option for consumers.141 Javelin stated that underserved consumers are highly open to mobile 

P2P payments as a replacement for cash transactions.142 According to its research, Javelin 

reported that in the 30 days preceding the submission of its comments, 28 percent of mobile 

underserved consumers conducted a mobile P2P transfer, twice the percentage of consumers 

overall.143 

 

charged to a mobile bill are not deceptive; (3) market participants obtain consumers’ express, informed consent to 

charges before they are billed to a mobile account, and maintain reliable records of such authorizations; (4) mobile 

carriers disclose all charges for third-party services clearly and conspicuously to consumers in a non-deceptive 

manner; and (5) carriers implement an effective dispute resolution process. FTC, #11, at 6. 

139 FTC, #11, at 5. The CFPB, in coordination with state attorneys general and the FCC, filed orders in federal courts 

against Sprint and Verizon which provide $120 million in redress to wireless customers who were illegally billed 

hundreds of millions of dollars in unauthorized third-party charges. See 

http://www.consumerfinance.gov/newsroom/cfpb-takes-action-to-obtain-120-million-in-redress-from-sprint-andverizon-for-illegal-mobile-cramming/

140 See Business Insider, The Peer-to-Peer Payments Report: The Exploding Market For Smartphone Apps That 

Transfer Money (August 28, 2014) http://www.businessinsider.com/explosive-growth-in-peer-to-peer-paymentapps-2014-8

141 CBA, #10, at 6; Consumers Union, #30, at 10.

142 Javelin, #49, at 5. 

143 Id.
36 CONSUMER FINANCIAL PROTECTION BUREAU 

2.2.9 Accessing digital channels with cash

There are products that enable consumers who use cash to access digital channels through 

various means, including using in-person retail to accept cash and confirm transactions initiated 

through a digital channel. Low-income consumers carry out a significant portion of transactions 

with cash. According to a report published by the Cash Product Office of the Federal Reserve 

System, 55 percent of consumers with household incomes less than $25,000 per year prefer 

cash over non-cash payment instruments. 144 The total value of low-income consumers’ cash 

spending, at $558 average per consumer per month, is much higher than any other income 

group’s cash spending and this group uses cash much more frequently for bill payments than 

other groups of consumers.145 Javelin reported that it found the underserved are more likely to 

use cash through online payment services (22 percent v 10 percent of all consumers).146

Commenters noted that access to mobile bill-payment channels could present a safe, convenient 

and possibly cheaper alternative to cash for unbanked, low-income consumers who may use 

cash for transactions such as bill payments.147 One provider, for example, commented that its 

service enables consumers to go online to initiate an electronic bill payment that is completed in 

cash at a nearby retail outlet.148 A person who wanted to pay his or her rent the day before it is 

due, for example, could go online and submit the transaction, complete the transaction at a 

nearby retail partner of the provider, and have a receipt to show payment.149 A consumer group 

 

144 BARBARA BENNETT, DOUGLAS CONOVER, SHAUN OBRIEN, AND ROSS ADVINCULA, FEDERAL RESERVE SYSTEM, CASH 

PRODUCT OFFICE, CASH CONTINUES TO PLAY A KEY ROLE IN CONSUMER SPENDING: EVIDENCE FROM THE DIARY OF 

CONSUMER PAYMENT CHOICE 9 (APRIL 2014)

145 Id. at 11.

146 Javelin, #49, at 6.

147 See Assets and Opportunity Network (AON), # 28, at 5; CFED, #26, at 4; NBPCA, #13, at 6-7; NCLC, #35, at 27; 

One Financial, #33, at 6. 

148 Intuit, #21, at 1, 12.

149 Id.
37 CONSUMER FINANCIAL PROTECTION BUREAU 

acknowledged the potential benefits of the such services but stated it had concerns that certain 

recourse and other protections may not available to customers of those services.

150

One industry commenter discussed cash reload networks that allow users of prepaid cards to 

load cash for a fee onto their prepaid cards, which can then be used to initiate card-not-present 

transactions with merchants over the phone, via internet, or through electronic bill pay of 

utilities.151 Its comments highlighted services such as self-serve kiosk-based solutions that allow 

users to directly transform cash into a variety of electronic payments, including remittances and 

bill payments.152

2.3 MFS is a channel, not a separate 

product

While various mobile financial services may be described as “products,” many commenters 

pointed out that “mobile financial services” is not a discrete set of products and services but 

rather a channel through which consumers can access financial services and products through 

many devices. The ABA stated that the FDIC has defined it as such.

153

 The ABA noted that 

“[mobile banking] is a channel, not a product, and does not address the primary reasons people 

do not use bank products.”154 Both consumer and some industry groups cautioned that using 

the mobile channel should not be viewed as a replacement for accessing products and services 

via other, more traditional channels. 

 

150 NCLC, #35, 27-28.

151 One Financial, #33, at 6. 

152 Id.

153 ABA, #45, at 4, 10.

154 Id. at 1.
38 CONSUMER FINANCIAL PROTECTION BUREAU 

2.3.1 Channels are secondary to ensuring access to 

appropriate products and services

Pointing to consumer benefits associated with having a bank account, several commenters 

suggested that mobile is secondary to the need for safe, affordable accounts. One commenter 

stated: “People with mainstream bank accounts tend to keep more of their earnings, fare better 

against financial shocks, and save more for the future. Conversely, lack of a bank account is 

directly related to poverty. Yet, traditional banking accounts remain out of reach for many 

people.”155

In discussing whether mobile will facilitate access to financial products, the ABA stated that 

“the primary reasons people use nonbank credit products such as payday loans rather than a 

bank loan or credit card are that they do not think that they qualify for a bank loan or credit card 

product or find alternative loans quicker and more convenient to obtain.”156 The ABA further 

commented that some consumers do not know or believe that banks make small loans, which 

may indicate a need for outreach and marketing to the underserved, through mobile or other 

means.157 Though the ABA acknowledged that “mobile banking may assist some people in 

moving from alternative credit products to bank products,” it stated that mobile banking will not 

address the primary reasons people use alternative credit products.158

Consumer and community advocates stressed the need to focus on an overarching goal of 

ensuring access to products that meet the needs of low-income consumers and communities. As 

one community group remarked: 

However services are delivered, regulators must also look at the products banks 

offer and their impact on the community, including the availability of low‐cost 

bank accounts without high and hidden fees, equal access for immigrants, 

 

155 ANHD, #12, at 5.

156 ABA, #45, at 10 (citing FDIC Staff Paper, supra note 57 and FRB 2015 MOBILE FINANCIAL SERVICES, supra note 1).

157 Id.

158 Id. at 10.
39 CONSUMER FINANCIAL PROTECTION BUREAU 

outreach and flexibility to truly reach unbanked and under‐banked people, and 

finally how those products are marketed and utilized. Basic banking products 

must be accessible, affordable, and appropriate to the needs of the communities 

in which they operate. Mobile banking has the potential to be one such product 

to increase access to banking.

ANHD, #12, at 2.
40 CONSUMER FINANCIAL PROTECTION BUREAU 

3. Opportunities

There was a general consensus among the commenters that mobile provides opportunities to 

enhance access to financial services and products. But not all commenters agreed that 

increasing mobile opportunities for customers will reduce provider costs associated with 

providing financial services and products. Some commenters suggested that the time and 

money savings have the potential to help low-income consumers achieve their financial goals.159 

To achieve such improvements, however, commenters acknowledged that consumers need to 

know how to use them and in ways that provide an overall net benefit to them.160 

3.1 Industry: Costly but scalable options 

Some commenters identified as significant the cost to industry of developing the necessary 

infrastructure to support mobile financial services. In addition, commenters highlighted the 

resources needed to provide ongoing technical support for the mobile channel, including 

support for customers new to or unfamiliar with how to use mobile technology to access 

financial services and products.161 Some providers described mobile as an “additive” channel. 

As a result, some industry comments asserted that mobile does not necessarily reduce costs for 

 

159 See discussion infra at pp. 46-48.

160 See discussion infra at pp. 49-52.

161 See ABA, #45, at 15-16; CBA, #10, at 10; CUNA, #24, at 1-3; Electronic Payments Core of Knowledge (EPCOR), 

#46, at 1.
41 CONSUMER FINANCIAL PROTECTION BUREAU 

financial services providers.162 In its comments, the ABA provided an estimate of the “additive” 

costs banks are charged monthly by vendors for various add-on account features: 

 Mobile: $1.86; 

 Debit card: $1.08; 

 Internet banking: $2.06; 

 Bill pay: $5.56; 

 IP and statement rendering $3.43; and

 Mailing costs $.16163

CUNA stated in its comments that credit unions incur significant costs to implement and 

integrate rapidly evolving different mobile services with their systems and “secure the mobile, 

online, and other channels. Additional costs could include fees for software licensing, third 

party providers, and legal review.”164 CUNA acknowledged that as consumers continue to make 

greater use of mobile financial services, there is potential for cost savings on a per-transaction 

basis over time.165 

The ABA and CBA both took issue with the example in the RFI comparing the costs of an inbranch transaction to a mobile transaction.166

 ABA suggested that “[i]t is misleading to compare 

 

162

 See ABA, #45, at 15-16; CBA, #10, at 10; CUNA, #24, at 1-3; EPCOR, #46, at 1.

163 ABA, #45, at 15 (the comment did not specify whether these costs were per transaction, per account or other 

basis).

164 CUNA, #24, at 2.

165 Id.

166 In the RFI, the Bureau provided an example from the FDIC Staff Paper, supra note 57, at 29-30:“One industry 

estimate cited in the White Paper calculated the average cost of an in-branch transaction was $4.25 whereas the 

average cost was $0.10 for a mobile transaction.” RFI, at 5, available at

http://files.consumerfinance.gov/f/201406_cfpb_request-for-information_mobile.pdf
42 CONSUMER FINANCIAL PROTECTION BUREAU 

mobile banking transaction costs with branch transactions.”167 It noted that “the ease of use 

often increases the volume of transactions, offsetting cost-savings from the lower-cost channel. 

For example, customers use ATMs more frequently and withdraw less per transaction ($118 on 

average) than they do with branches ($715 on average).”168 

The CBA noted various benefits of mobile banking for unbanked and underbanked consumers 

but stated that “mobile banking imposes great expense on our members through research and 

development, innovation, vendor management, system maintenance, and cybersecurity 

mearsure [sic].”169

One Financial expressed the view that MFS presents an opportunity to “realize significant 

reductions in customer acquisition and customer services costs,” which it described as historical 

barriers that prevent traditional or non-predatory financial institutions from servicing lowincome consumers.170 It noted that data from some prepaid providers “suggest cost-to-serve a 

low-income consumer through a prepaid channel with MFS is approximately 20 percent of the 

cost of using a traditional checking account and branch infrastructure.”171 

In its comments, CFSI stated that one provider expects average customer acquisition costs to be 

one-third to one-tenth that of a traditional brick and mortar bank (citing typical checking 

account customer acquisition costs of $200 to$300).172 CFSI went on to state that this model 

“translates into direct benefits for the consumer: the provider is able to offer a free app and debit 

 

167 ABA, #45, at 16.

168 Id. (citing FEDERAL RESERVE SYSTEM, THE 2013 FEDERAL RESERVE PAYMENTS STUDY 19 (DECEMBER 2013)) 

169 CBA, #10, at 10.

170 One Financial, #33, at 4.

171 Id. As PayPal, #29, at 2 noted, by making MFS faster (citing a study that found that certain types of contactless 

mobile payments can increase transaction speed by up to 15-30 seconds) it enhances convenience and flexibility, 

which could be critical for certain types of services, especially in the aggregate. 

172 CFSI, #6, at 6. In its comments, the ABA, #45, at 15, cited an estimate by Celente, a unit of Marsh & McLennan 

Cos., of $250-$300 per year to maintain a bank account, as reported in the Wall Street Journal, Robin Sidel and 

Dan Fitzpatrick, “End is Seen to Free Checking” (June 16,2010).
43 CONSUMER FINANCIAL PROTECTION BUREAU 

card with no monthly minimum balance or transaction fees while offsetting operating expenses 

entirely from interchange revenue.”173

By allowing consumers to open an account directly on their phones, CFSI reported that one 

provider has also been able to save on customer acquisition costs.174 Since consumers generally 

have their mobile phones with them at all times, CFSI opined, they can act on the advertising 

and messaging they receive to immediately open an account, rather than waiting to return home 

to their computers or having to visit a brick and mortar location.175 As a consequence, according 

to CFSI, mobile account opening results in a higher revenue rate for each marketing dollar 

spent.176

Sending customer notifications through mobile channels has also been an important cost-saving 

feature for the provider mentioned, according to CFSI.177 Mobile push notifications are free and 

are efficient; unlike email, CFSI noted, push notifications have a nearly 100 percent open rate 

since they appear at the top of a user’s screen even when the program itself is not open.178

Intuit, owner of Mint.com, stated that it assumes that savings from lower transaction costs for 

providing financial products and services through mobile channels “will inevitably be passed 

through to consumers.”179 Deloitte said that “once the core infrastructure is in place, scaling is 

relatively inexpensive—the same trait that makes software startups able to reach millions.”180 

 

173 CFSI, #6, at 6.

174 Id. at 6-7.

175 Id.

176 Id. at 6.

177 Id. at 6-7.

178 Id. at 6-7. 

179 Id. at 6.

180 Deloitte, #44, at 8.
44 CONSUMER FINANCIAL PROTECTION BUREAU 

One commenter noted that it is not surprising that informational services, deposits and 

transfers, and inquiries hold the most potential for reducing costs.181

Electronic Payments Core of Knowledge (EPCOR), a trade association focused on payments 

education and support to its member financial institutions, reported that its members were 

“split on whether there is cost savings to financial institutions in offering mobile services, 

especially when factoring in higher amounts of fraud often present in this environment.”182 

Some members reported savings related to fewer in-branch transactions, but others said it 

creates more work in the back office.183 Also, members identified as expensive the 

implementation of remote deposit capture and mobile bill pay, as well as the existence of 

ongoing expenses such as upgrades to technology and security.184

One Financial also stated that the ability of “innovators” to offer a “nationwide distribution 

channel at almost no cost” through MFS is limited by state Money Services Business (MSB) 

regulations.185 One Financial said that bank partners were harder for it to find and suggested 

that may mean more costs and delay for third-party entities wanting to issue products to 

vulnerable population through bank partners.186 

3.1.1 Costs to maintain

Commenters noted that the move to mobile may mean fewer visits to the teller or calls about 

transactions. This does not alleviate customer service needs, commenters stated, but merely 

changes the nature of the calls to more technological inquiries. The National Association of 

Federal Credit Unions (NAFCU), for example, stated that once credit unions have mobile 

 

181 Id. 

182 EPCOR, #46, at 1.

183 Id.

184 Id.

185 One Financial, #33, at 7.

186 Id.
45 CONSUMER FINANCIAL PROTECTION BUREAU 

applications designed or their websites are optimized for mobile use, “the overhead increases to 

provide those services and the technical support to troubleshoot those features for members.”187 

According to one credit union, “[m]obile financial services are effective at reducing the need for 

call center representatives to provide basic teller functions, but have increased the need for call 

center representatives who understand technical issues, are familiar with various mobile 

devices, and can help diagnose technical problems.”188

Comments also included concerns about trying to support a large percentage of account holders 

and field increased call volume of questions or issues with applications given the various 

number of issues that could be causing the problem, such as the operating system itself.189

EPCOR noted that most of its members report that it would prove cost-prohibitive to offer 

enhanced customer service times beyond normal business hours, and that a small institution is 

not likely to have staff available to address technical questions since the services are generally 

contracted through a third-party.190 EPCOR said that this could prove a major impediment to 

the adoption of mobile services.191 The NBPCA suggested that over time, as MFS and 

applications are able to serve consumers more efficiently, there may be less need for customer 

service by telephone.192

 

187 National Association of Federal Credit Unions (NAFCU), #14, at 4.

188 RBFCU, #27, at 3.

189EPCOR, #46, at 3. See also CFSI, #6, at 9 (“The possible proliferation of multiple types of operating systems 

(beyond Android and iOS currently in use) could also place a burden on providers who will need to customize their 

apps for each system.”).

190 EPCOR, #46, at 3.

191 Id.

192 NBPCA, #13, at 9.
46 CONSUMER FINANCIAL PROTECTION BUREAU 

3.2 Consumers: Saving money and time

Although commenters disagreed about whether adoption of mobile technology would raise 

industry costs, which might be passed on to consumers, most commenters agreed that in other 

respects MFS has great potential to lower costs for consumers. Commenters noted that mobile 

can provide access via a less expensive, “anytime, anywhere” means, for example, minimizing 

wait times and transportation costs.193 They said that mobile can also help consumers avoid 

higher cost products by using a product such as mRDC rather than a check casher.194 

Commenters said that it can also help consumers avoid fees associated with lack of real-time 

information such as overdrafts on accounts that could have been avoided by checking balances 

or alerts.195 Commenters also noted that the extent of savings for consumers also depends on 

whether provider cost savings are passed along by the financial services provider.196

Comments varied about the charges and costs for MFS currently incurred by the consumer. For 

example, EPCOR reported that its members generally do not charge account holders for mobile 

services; a few indicated they charge for Remote Deposit Capture (RDC) services due to the 

reported expense of this service.197 At least one consumer group stated that providers should be 

encouraged or required to offer multiple free ways to find out balances, such as by text message, 

so that consumers can find a convenient method that works for them.198 The groups reasoned 

that because consumers so frequently access account information via mobile and such access 

enhances their money management and other goals, free access will enhance consumers’ ability 

to achieve their financial goals. 

 

193 Appleseed, #41, at 9; CFSI, #6, at 5, 6; Intuit, #21, at 6, 8, 10; NBPCA, #13, at 2, 9. 

194 CAP, #34, at 1-2. See also ABA, #45, at 7-8; CBA, #10, at 5; CFED, #26, at 5.

195 CAP, #34, at 2; Consumers Union, #30, at 2.

196 CUNA, #24, at 2; Deloitte, #44 , at 6; Intuit, #21, at 6; RBFCU, #27, at 2-3.

197 EPCOR, #46, at 1.

198 NCLC, #35, at 16.
47 CONSUMER FINANCIAL PROTECTION BUREAU 

In terms of accessing financial services, one commenter pointed out that many higher fee, 

alternative financial services providers gain market share from lower-cost banks and credit 

unions due to their slightly extended hours of operation.

199

 Commenters noted that prepaid 

provider NetSpend reports that 40 percent of prepaid account loads, or deposits, take place 

outside of traditional banking hours.200 Comments suggested that the mobile channel could 

enhance the ability of lower-cost providers to provide access to their services and products 24/7, 

potentially enhancing access to lower cost services for underserved consumers.201 At least one 

commenter suggested, however, that low cost benefits of mobile products may be undermined 

by “fees, certain credit features, and other add-ons to the baseline cost” of the mobile 

products.202

The “real time” nature of mobile was discussed as a benefit in several ways. Several comments 

highlighted the ability to pay bills and access other services in real time via mobile, decreasing 

time and costs and possibly late fees.203 NetSpend reported that its customers, many of whom it 

reports are low to moderate income, like the ability to control and decide spending, and pay bills 

in real time.204 It noted that while online automatic withdrawals or bill pays may be attractive to 

people with regular and consistent paychecks, if income volatility is an issue then the ability to 

control transaction by transaction in real time may be an even more important feature of 

mobile.205 

 

199

 One Financial, #33, at 2.

200 CAP, #34, at 2, n. 9 (citing Bailey Reutzel, Prepaid Card Use Shows More Differences from Bank Habits,

AMERICAN BANKER, April 9, 2013, http://www.americanbanker.com/issues/178_68/prepaid-card-use-shows-moredifferences-from-bank-habits-1058162-1.html); CBA, #10, at 4.

201 CBA, #10, at 4; Intuit, #21, at 3-4; One Financial, #33, at 2.

202 The Commonwealth of Massachusetts Office of the Attorney General (Mass AG), #20, at 6.

203 CBA, #10, at 5-6; Intuit, #21, at 4; NBPCA, #13, at 2.

204 Netspend, #52, at 2-3. In its comments, NetSpend stated that it is focused on providing the estimated 68 million 

underbanked U.S. consumers with innovative and affordable financial products tailored to their unique needs.

205 Id. at 5-6.
48 CONSUMER FINANCIAL PROTECTION BUREAU 

Commenters said that access to mobile financial services may encourage consumers to 

comparison shop. One commenter identified a product feature that provides notification of 

alternative products that may benefit individual users, such as cheaper financial products.206 

Another comment highlighted that MFS enables “consumers who otherwise lack internet access 

to shop and pay for a wider array of goods and services, often with higher quality and better 

prices than are available locally.” 207 Related to this point, one commenter noted that those 

consumers who may move from using cash to using MFS may also start to use mobile more to 

access other kinds of products and services.208

Real time and location services also can help people detect fraud by helping them monitor 

accounts and receive alerts from their providers.209 Location services can also help consumers 

identify services available nearby. For example, Deloitte suggested that, during tax season, an 

application could show a consumer the closest free or low-cost tax preparation centers or 

Volunteer Income Tax Assistance (VITA) sites.210 Applications could also use geolocation to 

direct citizens to government resources on public benefits and explain the process or 

information required for processing.211 

 

206 Intuit, #21, at 12 (citing a feature of Mint.com that provide information about alternative products.)

207 NCLC, #35, at 22.

208 AON, #28, at 5.

209 Intuit, #21, at 14; NBPCA, #13, at 2.

210 Deloitte, #44, at 6.

211 Id. 
49 CONSUMER FINANCIAL PROTECTION BUREAU 

3.3 Outreach efforts to connect underserved 

consumers to mobile

Commenters suggested that, based on the FDIC 2013 Survey findings and other information 

low-income and vulnerable consumers often seek the in-person experience of bank tellers, 

telephone customer service, storefront alternatives and working with trusted partners.212 

According to FDIC’s 2013 survey on unbanked and underbanked, about one-third of customers 

primarily used bank tellers to access their accounts (nearly 80% had used a bank teller in the 

previous 12 months) and another third primarily used online as their means to access their 

accounts.213 Underbanked people were less likely to use the online channel but were more likely 

to use mobile devices as the primary method.214 Roughly half (54.7 percent) of households age 

65 or older and 47.5 percent of households with annual income under $15,000 primarily used 

bank tellers to access their accounts.215 

 

212

 ANHD, #12, at 4; Americans for Financial Reform (AFR), #23, at 3; NCLC, #35, at 13-18, 29.

213 FDIC 2013 SURVEY, supra note 42, at 53.

214 Id.

215 Id. at 8.
50 CONSUMER FINANCIAL PROTECTION BUREAU 

FIGURE 1: USE OF BANK TELLERS, ONLINE BANKING, AND MOBILE BANKING AS PRIMARY METHODS BY 

INCOME

2013 FDIC Survey of Unbanked and Underbanked Households, p. 56

Several comments cited a concern over the potential loss of bank branches and the impact on 

various segments of the underserved population who, for a variety of reasons, may need or want 

in-person guidance.216 One commenter stated that “mobile services should be used to make 

branches more efficient and expand outreach to underserved areas, not shrink financial 

inclusion.”217 Some commenters suggested that mobile and human assistance and other hybrid 

approaches may be very beneficial or needed to enhance access for this population.218

Deloitte recommended that financial firms could improve outreach to underserved consumers 

by applying the strategy of adapting the audience’s preferred mode of communication to the 

 

216 See discussion infra pp. 72-75.

217 NCLC, #35, at 30.

218 Id. at 28; ASOC, #40, at 8; Javelin, #49, at 6; Mass AG, #20, at 9; One Financial, #33, at 5. 

47.5

44.9

35.7

28.3

20.1

14.5

17.3

26.7

36.8

49.4

4.0 5.3 6.3 6.4 5.7

0

10

20

30

40

50

60

< $15k $15k - < $30k $30k - < $50k $15k - < $30k > = $75k

Bank teller Online banking Mobile banking
51 CONSUMER FINANCIAL PROTECTION BUREAU 

design and marketing of mobile financial services.219 It also suggested that gaining a better 

understanding of the targeted population could help identify effective partnership or marketing 

campaign opportunities. 220 It gave as examples partnering with a utility company or partnering 

with a trusted government agency to leverage infrastructure and reach large numbers of 

consumers.221 

EPCOR reported that its members use a variety of methods to market mobile financial services 

to underserved populations: radio and television ads; billboards; social media; online banking 

websites; training of all consumer-facing institution staff to discuss mobile options with 

consumer account holders; digital signs outside of branches; lobby displays; community events; 

and statement stuffers were the highest used methods.222 They did not report the extent to 

which each of these efforts was successful.

Several commenters pointed out that for mobile to reach the underserved in a meaningful way, 

it must be coupled with appropriate products and marketing. For example, a few commenters 

suggested ideas such as that “the current banking industry should be incentivized, if not 

required, to offer free or low cost checking accounts to the income eligible underbanked.”223 

One of the requirements suggested was that “the account must be advertised and promoted, 

available online, and understood and marketed by all branch staff so that any customer will have 

it readily available to them.”224

Some comments highlighted the need for increased education and outreach.225 Appleseed noted 

that its “Immigrant-Friendly Financial Services” characteristics as applied to mobile would 

 

219 Deloitte, #44, at 21.

220 Id. at 7.

221 Id.

222 EPCOR, #46, at 2.

223 Mass AG, #20, at 10; Appleseed, #41, at 6. 

224 ANHD, #12, at 5.

225 Id. at 2; CUNA, #24, at 4-5; ASOC, #40, at 9; Appleseed, #41, at 11.
52 CONSUMER FINANCIAL PROTECTION BUREAU 

include efforts to increase financial education and ensure mobile financial services are used 

appropriately by consumers.226 The ABA stated that, “[m]obile banking does not make people 

smarter or supply individual financial acumen. Improving financial literacy remains a priority 

even in a mobile world.”227 

In their comments, the Federation of Community Development Credit Unions (CDCUs) and 

CUNA highlighted a proposal to invest in the expansion of these mobile technologies in trusted 

community development financial institutions to help ensure that MFS is used to empower and 

address the financial needs of consumers in affordable and safe ways.228 Specifically, they 

proposed a national strategy to: 

 Increase the delivery and reach of electronic services in trusted financial institutions, 

such as credit unions; and 

 Support the training and education of the most economically vulnerable consumers to 

take advantage of online banking and mobile applications.229 

 

226 Appleseed, #41, at 11.

227 ABA, #45, at 20.

228 CDCUs, #38, at 2.

229 Id.
53 CONSUMER FINANCIAL PROTECTION BUREAU 

4. Challenges and risks

Most commenters agreed that mobile provides opportunities for greater access to safe, low-cost 

and appropriate financial services for lower income and underserved consumers. Many 

commenters also stated that there are challenges and risks that prevent more widespread 

adoption of mobile.230 Not all agreed, however, about what those barriers and risks are and how 

best to overcome them.

The most significant barriers and risks mobile poses for low-income and economically 

vulnerable consumers identified by commenters are:

 perceived risk of financial loss from data security breaches and loss of devices; 

 lack of digital financial literacy; 

 lack of digital access due to cost or technological issues;

 interconnectedness of digital media, e.g., social media, with financial services;

 eliminating in-person support services;

 ubiquitous use of data for marketing and underwriting that may create “virtual 

segregated neighborhoods;” and 

 potential for a multi-tiered system where non-mobile enabled consumers are left behind 

and nonbank customers are left with fewer protections.

 

230 See discussion infra pp. 54-75.
54 CONSUMER FINANCIAL PROTECTION BUREAU 

4.1 Security

Data security is not an issue that is particular or limited to mobile devices but many comments 

discussed security issues in the context of mobile financial services. There was widespread 

consensus among commenters that concern over security – real or perceived – is one of the 

most significant barriers to MFS adoption for consumers.231 

4.1.1 Data and transaction security

Data breaches and hacking: Many commenters discussed the risk and the increasing 

frequency of data breaches in general.

232 The Massachusetts Attorney General’s office stated in 

its comment letter, “the storage and transmittal of financial information on and through mobile 

devices presents unique security risks.”233 Comments discussed the risks the mobile channel 

presents including the amount of personal and financial information provided and accessed 

through the channel; the wide range and variability of operating systems and reliance on the 

customer to implement updates; and that more advanced security measures are not yet widely 

offered on more affordable smartphones.234 One commenter cautioned that “even if the number 

of attacks on mobile financial services is much lower than on online services, we must 

understand this will not last forever.”235

Identity theft: Several commenters identified identity theft as a risk, particularly because 

consumers are more likely to be in a public place when they access accounts through a mobile 

phone and they may not be aware of the risks when they transmit data using WiFi that is not 

 

231 ASOC, #40, at 3,5; Gemalto, #37, at 1; ABA, #45, at 14; EPCOR, #46, at 3 (“Mobile device authentication and 

consumer authentication measures need to advance to make mobile banking safe.”)

232 Budnitz, #48, at 4; One Financial, #33, at 6 (“Consumers are legitimately concerned about identity theft and data 

breaches, as well as about broader spectrum surveillance.”)

233 Mass AG, #20, at 2. The Office reported that from January 1, 2008 through December 31, 2013, it received notice 

of over 5,330 data breaches, affecting approximately 4.75 million Massachusetts consumers across a multitude of 

technologies.

234 ABA, #45, at 14; EPCOR, #46, at 3; Mass AG, #20, at 1.

235 Gemalto, #37, at 8.
55 CONSUMER FINANCIAL PROTECTION BUREAU 

their own.236 The impact of identity theft is more significant for low-income consumers, a 

commenter pointed out, because they have “few funds to absorb any economic loss that 

results.”237

Transaction security issues: Commenters noted that while there may be risks generally of 

personally sensitive data being transmitted electronically, risks also arise on a per transaction 

basis. Making sure that a transaction is both secure (from the consumer’s perspective) and not

fraudulent (from the provider’s perspective) is important to maintain trust in the e-commerce 

environment. Biometrics, innovative authentication measures, and tokenization were all raised 

by commenters as potential ways to help ensure that financial transactions remain safe.238 

4.1.2 Security associated with the device

Theft of devices: Commenters noted that mobile devices can be easily lost, stolen, or 

damaged, and consumers may not be able to access information if it was deleted or if they 

changed phones or providers.239 A commenter noted that consumers may become crime targets 

when they use mobile devices.240 Consumers Union reported that based upon a nationally 

representative survey of adult Internet users, Consumer Reports® projected that 1.6 million 

American were victims of smartphone theft in 2012.241 Consumers in cities appear especially 

vulnerable.242 

 

236 MFY, #17, at 3.

237 Budnitz, #48, at 5.

238 See, e.g., Gemalto, #37, at 4. 

239 Id.; CFSI, #6, at 8; CBA, #10, at 8: “As many of us can unfortunately attest, the portable nature of mobile phones 

makes potential loss or theft an unavoidable reality.”

240 Consumers Union, #30, at 13.

241 Id.

242 Id. at 13-14. (Over fifty percent of the robberies committed in San Francisco during a certain period, for example, 

were of mobile devices; Consumers Union also noted that N.Y. Attorney General has characterized smartphone theft 
56 CONSUMER FINANCIAL PROTECTION BUREAU 

Consumers Union reported that 36 percent of consumers surveyed do not have a passcode on 

their phone.243 In addition, few consumers understand that when they retire a phone, they have 

to overwrite the information or the phone has to be destroyed to get rid of the data – merely 

deleting it doesn’t remove it permanently.244 EPCOR also noted that lost devices that are not 

passcode-protected and mobile malware represent significant threats to all mobile services.245

In its comments, Appleseed raised the concerns of both personal and financial security for 

immigrants and posed the question of how the shift to mobile may affect those concerns.246 

Appleseed commented that vulnerable populations, such as immigrants, are more often the 

victims of street crimes and theft than other population subgroups.247 

Difference in operating system security: Though all operating systems can experience 

security breaches, a few commenters pointed out the different levels of risk associated with iOS 

(Apple phones) versus Android systems. According to comments, the Android’s open platform 

enables a greater number of users to access the platform, making it harder to monitor.248 

Though Android and iPhone use across the general population is fairly equal, there is a contrast 

at the lower-income levels. According to Pew, in households with incomes under $30,000, 13 

percent have iPhones, and 28 percent have Android (compared with 40 percent iPhone 

 

as a “growing public safety problem,” citing article Lisa Ward, “NY AG asks smartphone makers to fight theft,” 

Silicon V. Bus. J (May 14, 2013) 2013 WLNR 11882324)

243 Id. According to the FRB 2015 MOBILE SURVEY, the share of smartphone owners who password protect their phone 

increased to 69 percent in 2014 from 61 percent in 2013.

244 Consumers Union, #30 at 13.

245 EPCOR, #46, at 2.

246 Appleseed, #41, at 7.

247 Id.

248 See NAFCU, #14, at 2; Gemalto, #37, at 9 (citing to 2013 figures that showed 97 percent of the malware attacks 

targeted android platforms at http://www.forbes.com/sites/gordonkelly/2014/03/24/report-97-of-mobilemalware-is-on-android-this-is-the-easy-way-you-stay-safe/)
57 CONSUMER FINANCIAL PROTECTION BUREAU 

ownership rate in households with incomes above $75,000).249 According to Javelin, 24 percent 

of the unbanked who own a smartphone are on the iOS system and 57 percent are on the 

Android system.250 In contrast, 44 percent of the phones owned by underbanked and fully 

banked consumers run on the iOS system.251

Applications: The Privacy Rights Clearinghouse stated that the major app stores such as the 

Google Play store and Apple iTunes store may be “more likely to catch bad actors than other 

third-party app stores” but, it noted, an app doesn’t have to be malicious to contain security 

vulnerabilities.252 

Denial of service attack: One commenter described the risk that consumers will not be able 

to access their institution because of a “distributed denial of service” attack.253 When these 

attacks occur, the commenter stated, consumers are not able to conduct timely financial 

transactions, which may result in late fee charges, or other consequences of late payment.254 

The commenter suggested that current laws do not directly address protection for consumers 

harmed by these attacks.255

4.1.3 Enhancing security 

Many pointed to the flip side of security concerns – positive characteristics such as the ability to 

track and manage accounts and to detect fraud. Comments pointed to real-time alerts of 

suspicious transactions and the ability to block or manage account access instantaneously from 

 

249 Pew Research Center, Smartphone Ownership 2013, http://www.pewinternet.org/2013/06/05/smartphoneownership-2013/. 

250 Javelin, #49, at 3. 

251 Id.

252 PRC, #31, at 2.

253 Budnitz, #48, at 6.

254 Id.

255 Id.
58 CONSUMER FINANCIAL PROTECTION BUREAU 

the phone as “a powerful new kind of defense against fraud and theft” for consumers.256 In 

addition, the ability to detect when phones and payment instruments are not co-located and to 

track the location of a device, commenters explained, can help deter fraud and theft.257 As some 

commented, however, consumers need to be comfortable with using their mobile devices safely 

for this to be effective.258 For example, Appleseed cautioned that recent innovations in mobile 

payments may require an even “higher level of comfort with technology and many consumers 

may find it easier to pay with another method.”259 

4.2 Privacy

Many commenters pointed to a lack of privacy of consumers’ data as a risk of MFS. Comments 

reported that this risk often arises because consumers may not be aware of the extent and type 

of data collection practices and their consequences.260 Even if they are aware, one commenter 

pointed out, they may “have no opportunity or mechanism to avoid or mitigate them.”261

Some commenters asserted that consumers have control over their privacy because they can 

choose to not turn on location-based services or choose to exchange data for real-time 

information or services they may want.262 Others pointed out that the business model for MFS 

and mobile commerce in general has become service in exchange for data, with little to no 

 

256 One Financial, #33, at 8. The FCC TCPA ruling discussed supra at n. 94 above exempted from the TCPA’s consent 

requirements financial institutions sending free-to-end-user messages relating to identity theft, fraud, data security 

breaches, and arranging for the receipt of pending money transfers, if financial institutions meet various conditions. 

See FCC Declaratory Ruling and Order, paragraphs 125-139. 

257 Id.

258 MFY Legal, # 17, at 2; NCLC, #35, at 16.

259 Appleseed, #41, at 8. According to the FRB 2015 MOBILE SURVEY, supra note 1, at 18, among those surveyed who 

do not use mobile payments, 75 percent reported that is easier to pay with other methods.

260 AFR, #23, at 2; Mass AG, #20 , at 3; Reinvestment Partners, #22, at 3.

261 Mass AG, #20, at 3.

262 See, e.g., Intuit, #21, at 15.
59 CONSUMER FINANCIAL PROTECTION BUREAU 

choice for consumers.263 There is evidence that consumers are growing more concerned about 

their online information sharing. According to the Pew Mobile Technology Fact Sheet:

 54% of app users have decided to not install a cell phone app once they discovered how 

much personal information they would need to share in order to use it

 30% of app users have uninstalled an app that was already on their cell phone because 

they learned it was collecting personal information that they didn’t wish to share....

 19% of all cell owners have turned off the location tracking feature on their cell phone 

because they were concerned that other individuals or companies could access that 

information.

Pew Research Center, Privacy and Data Management on Mobile Devices (2012) 264

More recently, in a survey conducted by Pew on Americans’ views on data collection and 

security, 90% of respondents said that controlling what information is collected about them is 

important– 65% think it is “very important” and 25% say it is “somewhat important.”265 Only 9 

percent of respondents, however, believed that they had “a lot” of control over how much 

information is collected about them and how it is used.266 Though the survey was not limited to 

mobile services, the survey indicates “Americans hold a range of strong views about the 

importance of control over their personal information the importance of control over their 

personal information...”267

 

263 PIRG and CDD, #19, at 5, 7; PRC, #31, at 3.

264 Available at http://www.pewinternet.org/2012/09/05/privacy-and-data-management-on-mobile-devices

265 Pew Research Center, Mary Madden and Lee Rainie, Americans’ Views About Data Collection and Security (May 

20, 2015) available at http://www.pewinternet.org/2015/05/20/americans-views-about-data-collection-andsecurity/

266 Id.

267 Id.
60 CONSUMER FINANCIAL PROTECTION BUREAU 

The FTC pointed out the risks to privacy (and security) due to the high number of companies 

involved in the mobile payments system and the large volume of data collected.268 AgeCheq and 

PrivacyCheq, both companies that provide mechanisms designed to help consumers control 

access to their identification, suggested a streamlined disclosure design.

269 Suggesting that 

consumers may be more comfortable with MFS if devices gave them more control over their 

identification, AgeCheq suggested that “[a] logical way to provide that ability would be for ...

vendors of mobile devices to create a new pseudo identifier for “privacy” that would give the 

consumer full control over the identification of their device for privacy purposes.”270 The 

Privacy Rights Clearinghouse suggested that privacy protection must be built into products from 

the beginning, as the creation of detailed personal profiles, which it said may result in 

discriminatory practices, grows more pervasive.271

Commenters noted that providing disclosures that are clear and sufficient for consumers to 

make informed decisions is difficult in the MFS environment. The Privacy Rights Clearinghouse 

offered that “it is completely unrealistic to expect a consumer who only has access to a mobile 

device with a small screen to read the privacy policies.”272 Industry comments identified the 

small screen size as limiting providers’ ability to comply with disclosure requirements.273 

Comments suggested that required disclosures should be adapted to mobile technology in ways 

that enhance understanding about the product such as its costs and fees.274 

Data brokers and lead generators: Another issue related to data raised by comments 

involves data brokers and lead generators. According to one set of comments, credit card and 

other financial companies, auto dealers, for-profit schools, and many other businesses pay 

 

268 FTC, #11, at 7.

269 AgeCheq, #9, at 1-2; PrivacyCheq, #8, at 1-2.

270 AgeCheq, #9, at 2.

271 PRC, #31, at 4. 

272 Id.

273 ABA, # 45, at 16; AFSA, #18, at 2-3; NAFCU, #14, at 3. 

274 CAP, #34, at 3; NCLC, #35, at 5.
61 CONSUMER FINANCIAL PROTECTION BUREAU 

online “lead generators” or data brokers to gain access to and information about “qualified 

potential customers.”275 The FTC stated that when data is sold to data brokers and other 

entities, “often outside the protections of specific privacy laws, questions arise regarding how 

this data may be used to either benefit or disadvantage low-income and underserved 

communities.”

276

 

Some respondents perceived regulatory gaps related to these practices.277 One consumer group 

stated that a recent report from the World Privacy Forum “highlighted the fact that new types of 

predictive consumer scoring, fueled by thousands of pieces of information about consumers, are 

largely unregulated [by] either the FCRA or the Equal Credit Opportunity Act.”278 The group 

also referred to a survey it conducted on data brokers that it reported revealed “serious 

inaccuracies in some uses of big data.”279 Along with other recommendations, it suggested that 

“[A]t a minimum, providers must comply with the FCRA for any data that is assembled or 

evaluated by third parties and might be used for credit, insurance, employment or other FCRA 

purposes. In particular, data should be provided to and used by mobile providers and others 

only if they have a permissible purpose under the FCRA.”280

Industry comments suggested that existing laws such as FCRA and the Gramm-Leach-Bliley Act 

(GLBA) protect consumer information.281 But some consumer groups opined that the GLBA 

prohibitions on sharing information only apply to financial institutions and their accounts, not 

 

275 PIRG and CDD, #19, at 10 (terms were in quotes in comments). 

276 FTC, #11, at 10. See also FED’L TRADE COMM’N, DATA BROKERS: A CALL FOR TRANSPARENCY AND ACCOUNTABILITY (MAY 

2014), available at http://www.ftc.gov/system/files/documents/reports/data-brokers-call-transparencyaccountability-report-federal-tradecommission- may-2014/140527databrokerreport.pdf cited by the FTC and other 

commenters, e.g., PRC, #31, at 3. 

277 NCLC, #35, at 11. See also, Appleseed, #41, at 16; FTC, #11, at 9-11; #PRC, #31, at 3-4. 

278 NCLC, #35, at 11.

279 Id. n. 21 citing NCLC, “Big Data: A Big Disappointment for Scoring Consumer Credit Risk” (March 2014), 

available at http://www.nclc.org/issues/big-data.html.

280 Id. at 12. See also Mass AG, #20, at 4.

281

 CBA, #10, at 10.
62 CONSUMER FINANCIAL PROTECTION BUREAU 

to sharing by or accounts of other types of providers.282 One commenter also noted that GLBA 

only prohibits sharing of account numbers for purposes of marketing, and some inappropriate 

sharing may fall outside that restriction.283 The commenter noted that there are other laws 

designed to restrict sensitive information from being shared, but mobile transactions may not be 

covered by these protections or they may not be sufficient to protect consumers.284

One consumer group called on the Bureau to “go beyond GLBA and FCRA data sharing 

provisions, and adopt additional protections for consumers.”285 Groups recommended that 

consumers should have to affirmatively opt in to data sharing or entities should not be 

permitted to share certain types of sensitive personal and financial information at all.286 US 

Public Interest Research Group (PIRG) and the Center for Digital Democracy (CDD) urged the 

Bureau to take more action to protect privacy, including building on a proposal for a Consumer 

Privacy Bill of Rights developed by President Obama’s Administration in 2012 and work already 

done by the FTC, and to develop rules that place consumers’ financial data more under their 

control.287 

4.2.1 Data for marketing and other purposes 

Consumer advocates cited a significant risk of MFS data being used to segment the market with 

potentially negative consequences for low-income consumers, people of color, and other 

 

282 See AFR, #23, at 2; NCLC, #35, at 3-4, 9-11.

283 NCLC, #35, at 10.

284 Id. For example, it cited the Telemarketing Sales Act (prohibits telemarketers from using pre-acquired account 

information to charge consumers’ credit or debit cards without their express informed consent) and the Restore 

Online Shoppers Confidence Act (prohibits the initial merchant from disclosing a consumer’s billing information to 

any “post-transaction third-party seller” for purposes of charging the consumer’s account). 

285AFR, #23, at 2.

286 Id.; NCLC, #35, at 1. 

287 PIRG and CDD, #19, at 9.
63 CONSUMER FINANCIAL PROTECTION BUREAU 

traditionally underserved populations.288 These commenters noted various ways such 

segmentation could be done.

289

 Whether referred to as “digital dossiers” or “personal profiles,” 

commenters discussed concerns over the extent of locational-based data collection and targeting 

technologies, and other geo-technologies that permit highly granular geographic focused 

marketing practices.290 The commenters raised concerns that geographic-based targeting, 

combined with data profiling predictive analytics, can lead to potentially discriminatory 

practices, e.g., denial of credit to certain segments, which further sub-divide a neighborhood 

based on race, ethnicity, income, buying behaviors, and other factors.291 

One commenter noted that as the digital marketing ecosystem grows larger and more 

integrated, “the provision and marketing of financial services on mobile devices are integrated 

into a broader set of industry practices on all digital media. Increasingly, consumers are 

identified and tracked across all “screens,” which, due to our often-simultaneous use of multiple 

devices, enables far more effective commercial targeting.”292

Others expressed concerns related to data being used to track where consumers reside, their 

movements and purchasing patterns, and also to determine with whom a person associates.293 

Commenters also noted that a significant finding of a report on big data from the Executive 

Office of the President, in a letter to the President from the agencies submitting the report, was 

that “big data analytics have the potential to eclipse longstanding civil rights protections in how 

 

288 AFR, #23, at 3; NCLC, #35, at 25; PIRG and CDD, #19, at 6.

289 PIRG and CDD, #19, at 8; PRC, #31, at 3-4.

290 Id.; Reinvestment Partners, #22, at 2.

291 See PIRG and CDD, #19, at 5; AFR, #23, at 2.

292 PIRG and CDD, #19, at 3-4 went on to explain that “[k]ey features of this system include widespread data 

gathering and analysis; use of real-time location; specialized mobile ad-targeting services that reach a person in real 

time; formats for ads and commercial content specifically honed for the mobile platform; measurement services 

that identify how we interact with mobile applications; apps and other specialized applications that make ongoing 

targeting easier to accomplish; frameworks to utilize mobile and other digital “path-to-purchase” strategies; a focus 

on multicultural consumers’ use of mobile services; and “Big Data”-driven technologies and practices that 

incorporate consumer mobile data into comprehensive and actionable user profiles.”

293 Reinvestment Partners, #22, at 2. 
64 CONSUMER FINANCIAL PROTECTION BUREAU 

personal information is used in housing, credit, employment, health, education, and the 

marketplace.”294 

Some groups warned that mobile financial services without strong consumer protections related 

to data collection and use could lead to “virtual segregated neighborhoods.”295 Others warned 

about the use of cultural differences in behavior to market products. An example provided by a 

commenter involves situations in which some in a “group” are ranked financially lower based on 

social media or other information.296

Some commenters spoke positively about the use of big data for validating identity or for fraud 

detection purposes,

297

 as well as its use to help financial institutions identify and reach potential 

new customers, including the underserved.298 Recognizing that “big data is here to stay,” one 

commenter suggested that the focus should be on how the data is “operationalized.”299 This 

commenter expressed concerns that the use of big data may bring about both “general privacy 

problems” as well as “thousands of new possible methods for disparate and adverse impacts 

upon protected classes.”

300 It suggested that the “proper unit for regulatory analysis is the 

creator of the analytics [that use big data.]”

301

 

294 Id. citing Executive Office of the President, Big Data: Seizing Opportunities, Preserving Values Introduction, 65 

(May 2014) 

295 See, e.g., AFR #23, at 3; PIRG and CDD, #19, at 8; Reinvestment Partners, #22, at 2-3.

296 NCLC, #35, at 11-12. 

297 Intuit, #21, at 15.

298 AFSA, #18, at 5.

299 Reinvestment Partners, #22, at 2.

300 Reinvestment Partners, #22, at 2.

301 Id.
65 CONSUMER FINANCIAL PROTECTION BUREAU 

4.3 Digital financial literacy and access

4.3.1 Digital financial literacy

The existing challenges and barriers to underserved consumers accessing financial services and 

products may be exacerbated by a lack of “digital financial literacy.” Digital financial literacy 

includes knowing how to use devices to safely access financial products and services via digital 

channels in ways that help consumers achieve their financial goals, protect against financial 

harm and enhance ability to know where to get help. There seems to be consensus in the 

comments that along with investments in mobile technology to bridge access, there is a need for 

“major investments in digital literacy to ensure that consumers are able to navigate the 

technology necessary to conduct their financial services online.”302 Commenters noted a need 

for more understanding for both consumers and those intermediaries and front-line staff 

working with consumers who may benefit from knowing more about MFS options and how to 

engage in digital finance in ways that help clients achieve their goals.

A recent study conducted by the Federation of Community Development Credit Unions and the 

Aspen Institute revealed that very low-income members with annual incomes below $20,000,

do not use financial services offered via the internet because “they do not understand the terms 

and costs associated with services and are afraid of being scammed.”303 

This is not surprising given the level of complexity involved in many MFS. As one commenter 

noted, in pointing out the need for technological literacy: “MFS applications require users to 

understand how to download MFS applications, navigate websites using a mobile browser, 

upload photos for remote deposit capture, etc. Recent innovations in mobile payment services, 

such as Near Field Communications (NFC) technologies and mobile wallets, require an even 

 

302 ASOC, #40, at 6.

303 CDCU, #38, at 2.
66 CONSUMER FINANCIAL PROTECTION BUREAU 

higher level of comfort with technology and many consumers may find it easier to pay with 

another method.”

304

4.3.2 Access to financial services 

“Access” to financial services has long meant having physical access to branches and personnel 

that help low-income consumers achieve their financial goals. Commenters noted that mobile, 

as a channel, raises other issues of “access.” 

Cost: Comments raised concerns about the increasing costs of data plans, and fewer unlimited 

plans, as a challenge for underserved and immigrant consumers.305 One commenter noted that 

various nonfinancial service providers such as social media sites are competing for scarce data 

allotments.306 Pew’s research found 44 percent of smartphone owners with household incomes 

less than $30,000 reported cancelling or having their service cut off for a period of time because 

maintaining their service was a financial burden.307 

In the FRB 2013 Mobile Survey, 11 percent of all mobile phone owners noted that data costs 

prevented them from using mobile banking and payment services.308 In the FRB 2015 Mobile 

Survey, 6 percent of respondents chose “my bank charges a fee for using mobile banking” as one 

of the reasons they did not use mobile banking.309 

In addition, commenters expressed concern that the inability to obtain or afford the latest 

technology could leave low-income and economically vulnerable people behind and may create 

another means of being “underserved.” One commenter noted that the greater reliance on payas-you-go or prepaid phones may mean that consumers do not have 24/7 access if phones run 

 

304 Appleseed, #41, at 8. 

305 Id. at 9; NCLC, #35, at 23.

306 NCLC, #35, at 23.

307 Pew Smartphone Use in 2015, supra note 1, at 14.

308 FEDERAL RESERVE BOARD, CONSUMERS AND MOBILE FINANCIAL SERVICES 2013 11 (MARCH 2013).

309 FRB 2015 MOBILE SURVEY, supra note 1, at 13.
67 CONSUMER FINANCIAL PROTECTION BUREAU 

out of minutes or data or service is not good.310 This could affect the ability of the consumer to 

access his or her prepaid products, potentially locking the consumer out of access to financial 

services, at least in a convenient and timely manner.311 One commenter suggested that prepaid 

phones are helping to make smartphones more accessible to the population at large by reducing 

prices.312

Some groups pointed to the Lifeline Assistance and other programs where the government 

provides access to and discounts on cell phone service. Though this may be a way to help lowincome consumers access mobile technology, groups pointed out that many low-income 

consumers still have no access to smartphones through these programs.313 AARP suggested 

many still view smartphones as a luxury even as more and more financial and other services are 

moving to online and mobile channels.314

Language: According to comments, many if not most mobile applications do not provide 

multilingual options, limiting the ability of non-English speaking consumers to use MFS or 

understand the terms and fees.315 Some services, one commenter noted, may be marketed in the 

consumer’s primary language, but many of the details in the fine print may only be in English.316 

One commenter suggested that mobile applications should have a default language feature, 

which would allow access to the user’s native language.317 Others suggested that providers 

should make services available in the different languages used in the bank or credit union’s 

customer service and marketing areas and have service personnel available to explain how to use 

 

310 ABA, #45, at 18.

311 See, e.g., ABA #45, at 18; NCLC #35, at 23; One Financial #33, at 9.

312 One Financial, #33, at 9.

313 AARP, #51, at 9; PIRG and CDD, #19 at 7.

314 AARP, #51, at 9. .

315 AFR, #23, at 3; CUNA, #24, at 4; NCLC, #35, at 25-26.

316 NCLC, #35, at 25-26.

317 Deloitte, #44, at 13.
68 CONSUMER FINANCIAL PROTECTION BUREAU 

the system.318 Appleseed also pointed to the need to “ensure to the greatest extent possible that 

the terms of the services being marketed to non-English speaking customers are the same as 

those marketed to English-speaking mobile money users.”319

Technology: Though technology can enhance access, commenters pointed out that it can also 

present barriers to access if the technology is turned off, the device is lost or the phone service is 

terminated.320 Lower-cost devices may not have the latest technology such as high resolution 

cameras, larger screens, near-field-communication (NFC), and other features.321 Commenters 

noted that mobile apps that require the latest features would not be accessible to consumers that 

do not have or cannot afford the latest technology.322

Commenters noted that small screens may not be conducive to reading text-heavy disclosures,

particularly for consumers who may be visually impaired. While the small screen may make it 

difficult to provide detailed or complex information, NCLC noted that “[s]mart design can use 

that small screen as an advantage, to provide clear information in manageable bites, enhancing

understanding.”323 One industry commenter listed the following reasons that user experience 

(UX) design for MFS for underserved consumers is particularly difficult:

a. High proportion of customers with limited technological aptitude or experience 

b. Low income consumers’ use of a large variety of different smartphones, including 

those with varying operating systems, screen sizes, hardware, and other key 

features

 

318 Appleseed, #41, at 6-7 (Appleseed noted the remittance disclosure provisions added to the Electronic Funds 

Transfer Act (EFTA) in the Dodd-Frank financial reform legislation that require that the disclosures be made in 

English and in each of the foreign languages principally used by the remittance transfer provider, or any of its 

agents, to advertise, solicit, or market, either orally or in writing, at that office.) 

319 Id.

320 See ASOC, # 40, at 5; CFSI, #6, at 8; NCLC, #35, at 22.

321 CUNA, #24, at 4.

322 See, e.g., CUNA, #24, at 4.

323 NCLC, #35, at 5.
69 CONSUMER FINANCIAL PROTECTION BUREAU 

c. Difficulties designing MFS that provide access to consumers in multiple languages

d. Health problems with higher incidence among low-income consumers (e.g. 

diabetic retinopathy or arthritis) and which may affect their ability to use the 

device

e. Limited affordances for consumers who are uncomfortable reading small text or 

large bodies of text

f. Mandated or standard disclosures that make it difficult for service providers to 

provide plain English or translated explanations of terms and conditions 

g. Trust issues around remote account opening and surveillance

One Financial, #33, at 6-7.

In addition, another set of access barriers was noted by the ABA, stating that “opening an 

account through a mobile app (or online) may be more difficult for the unbanked because they 

may lack commonly used identification verifiers, such as information contained in credit 

reports, that banks use to verify identities for purposes of compliance with identity theft and 

customer identification requirements.”324

4.4 Financial loss

Many comments noted that many underserved or economically vulnerable consumers are living 

within tight margins and can benefit from MFS because of its real-time tracking and other 

features.325 But, they cautioned, the risk of loss also exists as more products may not have safety 

 

324 ABA, #45, at 17.

325 MFY Legal, #17, at 2; NCLC, #35, at 22; Netspend, #, 52, at 2. 
70 CONSUMER FINANCIAL PROTECTION BUREAU 

of funds (FDIC insurance), clear dispute resolution consumer rights and procedures or 

understandable fee disclosures.326 

It may also be unclear which entity in the mobile payment chain is liable for loss. In "Paper, 

Plastic ... or Mobile? An FTC Workshop on Mobile Payments," the FTC pointed out that when 

compared to a more traditional payment system, a mobile payment system involves numerous, 

unrelated parties that comprise the mobile payment chain, including:

 The developer of the application ("app") that enables the transaction or activity;

 The developer of the operating system of the mobile device;

 The manufacturer of the mobile device;

 The carrier of cellular and data service for the mobile device;

 Payment processors that facilitate the transfer and authorization of payments;

 Advertisers, marketers, data aggregators, billing aggregators, and other third parties who 

may collect, aggregate, analyze, and/or sell information about the user for marketing, 

advertising, and other business purposes;

 The financial entity providing funds; and

 The recipient of the funds.327

One commenter identified risks when third party agents are involved as including that the fund 

transfers may not occur as directed by the consumer or may not occur at all, or the payment may 

be late, for an incorrect amount, or sent to the wrong person.328 The commenter suggested that 

the problem may be due to an error caused by the financial institution or a third party agent; or 

 

326 See generally NCLC, #35; Consumers Union, #30.

327 FTC, #11, at, 7.

328 Budnitz, #48, at 8.
71 CONSUMER FINANCIAL PROTECTION BUREAU 

it may instead be due to one of the parties facilitating the transfer.329 The commenter 

questioned whether current law is sufficient to protect against these risks of loss given the 

various parties that may be involved in mobile transactions.330

Though many commenters spoke to the convenience and benefits of providing access to multiple 

forms of payment via a mobile device, commenters raised issues arising from the fact that there 

are multiple parties to the transaction and the protections that apply may depend on the 

payment method used for the transaction.331 The presence of multiple parties can cause 

confusion for consumers, which, in turn, may cause financial loss if it is not clear from which 

entity they must seek redress. 

The varying levels of protection can also cause confusion and loss, commenters noted. From 

one device, a consumer may use a credit card, a debit card or mobile carrier billing to pay for a 

transaction. Depending on which payment method is used, varying rules apply. If there is an 

unauthorized charge on a credit card, for example, one commenter said, there is no liability if 

the charge is reported, and payment is not due during the time the charge is being 

investigated.332 The commenter further noted that unauthorized debits are subject to varying 

caps on liability depending on whether the access device was lost or stolen and when the 

unauthorized transfer is reported. In that instance, with debits, funds must be restored in the 

account unless an investigation shows the transaction was authorized.333 But, commenters 

noted concerns that payments charged directly to a mobile carrier may be treated differently.334 

 

329 Id.

330 Id.

331 Consumers Union, #30, 9-10; NCLC, #35, at 6-7.

332 Consumers Union, #30, at 9. See also Regulation Z, 12 C.F.R. §1026.12. 

333 Consumers Union, #30, at 9. See also Regulation E, 12 C.F.R. § 1005.6. 

334 See, e.g., Consumers Union, #30, at 9; MFY Legal, #17, at 3. The CFPB, in coordination the state attorneys 

general and the Federal Communications Commission (FCC), took action against Verizon and Sprint alleging that 

the companies engaged in unfair practices by operating billing systems that allowed third parties to “cram” 
72 CONSUMER FINANCIAL PROTECTION BUREAU 

4.5 Loss of other channels – person-toperson contact and customer service

Several comments pointed out the benefits of branches while other comments focused on the 

impact of more branch closures, which have disproportionately affected low-income 

communities.335 One industry commenter expressed the view that “MFS provides an 

opportunity to replace and supplement the ‘vanishing branch network’ in low income 

neighborhoods.336 It viewed MFS as a ‘mitigating factor’ that could help maintain access to 

mainstream financial services.337 But consumer groups and others made clear that they believe 

there is an ongoing need for some physical, in-person presence.338

In its comment, One Financial noted that its customers typically access accounts at financial 

institutions through the marketing channel by which they were acquired. But One Financial 

reported that “customers return again and again to their neighborhood locations for service”339 

for both insured banks and nonbank AFS providers.

While ASOC reported that its Banking in Color survey of low- and moderate-income 

communities of color showed that “bank branches remain a vital part of how some communities 

 

unauthorized charges on customers’ mobile-phone accounts and ignored complaints about the charges. See supra

note 139. 

335 See, e.g., CAP, #34, at 2; ( “the vast majority of branch closures since 2008 have taken place in zip codes with 

household incomes below the US median”); CFED, #26, at 5-6; One Financial, #33, at 8.

336 One Financial, #33, at 8. 

337 Id.

338 See, e.g., ANHD, #12, at 1, 4; AFR, #23, 2-3; CFED, #26, at 5-6.

339 One Financial, #33, at 3.
73 CONSUMER FINANCIAL PROTECTION BUREAU 

access financial products and services,” 340 they noted interesting differences across different 

communities, as follows:

The proximity to home or work was a priority for nearly half (48%) of all survey 

respondents when choosing where to conduct financial transactions. Forty percent 

of all survey respondents deposit checks or cash inside a bank branch. While more 

than one-third of African American and Latino respondents deposited checks within 

a branch, fifty-two percent of AAPI [Asian Americans and Pacific Islanders] 

respondents deposit checks inside a bank or credit union branch, 45% deposits [sic] 

cash inside the branch, and 39% cash checks inside bank branches. By comparison, 

only 25% of AAPI respondents use online banking services for managing payments 

and accounts. 

The reliance on bank branches was especially high for Chinese and Taiwanese 

respondents, who deposit checks in bank branches at 57% and 64%, respectively. 

Chinese language respondents also indicated distance from home (70%) and ability 

to communicate in their native language (56%) as a top consideration for 

determining where to bank.... Taken together, survey results reflect both a high level 

of comfort and reliance on bank branches as well as high prevalence of bank 

branches with culturally and linguistically relevant services in neighborhoods and 

communities with high concentrations of the Chinese community. 

ASOC, #40, at 6.

A related concern raised by commenters about the move to mobile is loss of customer service. 

In a survey of low-income Hispanic consumers across California conducted by National Council 

of La Raza (NCLR) in 2013, 85 percent of account holders and 71 percent of those without a 

transaction account rated customer service as very important in choosing financial services.341 

In the Banking in Color survey, LMI consumers, regardless of banking status, identified 

 

340 ASOC, #40, at 6.

341 Consumers Union, #30, at 12, n.39.
74 CONSUMER FINANCIAL PROTECTION BUREAU 

customer service as a significant factor in what they were looking for in a bank.342 As the FDIC 

Staff Paper noted (citing a Javelin survey from July 2013) “25 percent of consumers who do not 

use mobile banking stated that one of the top three reasons they do not use mobile banking was 

that they preferred to deal with people.”343 

Commenters cited problems related to obtaining service from some mobile service providers, 

including prepaid products often accessed via mobile channel, that fail to provide a phone 

number, clearly display the phone number, make phone access difficult to navigate, or charge 

customers who wish to speak with a customer service representative.344 Commenters pointed to 

the ongoing need for free customer service via phone, for those using the mobile channel as well 

as those who cannot easily access internet or who do not transact via mobile.345 As CAP 

commented: “[t]his is particularly important for mobile products that have either a limited 

physical retail presence where customers may ask questions and get help, or no physical 

presence at all.”346 

Comments suggested an ongoing need for paper statements or account agreements.347 NCLC 

also added that “[p]aper copies of account agreements or statements may be unnecessary for 

mobile transactions that are used only once or for small dollar amounts. But for larger 

transactions and more significant, ongoing relationships, paper options can ensure that 

consumers can carefully read or reference account terms and can see ongoing charges.”348

 

342 ASOC, #40, at 3.

343 FDIC Staff Paper, supra note 57, at 33.

344 See Consumers Union, # 30, at 2-4; CAP, #34, at 2; NCLC, #35, at 13-14. 

345 See also, NCLC, #35, at 13-14 (“All mobile financial services should be required to provide a toll free number to 

address problems”); CAP, #34, at 2 (“At a minimum, mobile financial services should include free telephone access 

to customer service.”) 

346 CAP, #34, at 2.

347 AARP, #51, at 5-6; NCLC, #35, at 13-18. 

348 NCLC, #35, at 15. See also AARP, #51, at 3 (consumers should have ready access to paper statements and terms 

and conditions at no or low cost for a period of two years).
75 CONSUMER FINANCIAL PROTECTION BUREAU 

NCLC also pointed out that the person who opens or views an account on a mobile device may 

not be the account holder. In that circumstance, NCLC noted, it would be inappropriate to have 

as a consequence taking away the account holder’s access to paper statements or other 

communications.349 Other comments noted the cost savings from moving to mobile and online 

statements, including saving paper.350 

 

349 NCLC, #35, at 15-16.

350 AFSA, #18, at 2; NBPCA, #13, at 4. 
76 CONSUMER FINANCIAL PROTECTION BUREAU 

5. Education and 

empowerment –

ideas for the future 

Consumer and industry commenters discussed the potential for mobile financial services to help 

the underserved access financial products and services, and manage financial resources to 

achieve their goals.351 The comments also noted the increasing use of smartphones among the 

underserved has not led to widespread adoption of mobile financial services, with some

exceptions.352 For those who use MFS, the use appears to be significant, especially as it relates 

to managing money through checking balances and alerts.353 

Though there are many reasons for the rate of adoption, comments suggest that there is a need 

to enhance digital financial literacy to help bridge the divide. But there are impediments to 

digital financial literacy. As identified in the comments, these include 1) the cost of the 

technology and data plans; 2) the lack of comfort with the technology and digital literacy; 3) the 

lack of transparency with regard to data; 4) the concern about security; 5) the language access 

issues; and 6) the number of entities in the payment chain. Commenters agreed about the need 

for more efforts specifically targeting low-income and economically vulnerable populations and 

the groups that serve them about how to engage through mobile devices safely and effectively. 

 

351 See discussion supra at pp. 40-52.

352 See discussion supra at pp. 46-52.

353 See discussion supra at pp. 17-34.
77 CONSUMER FINANCIAL PROTECTION BUREAU 

Many conveyed the same opinion expressed by Javelin that “[a] winning combo” for 

underserved consumers is “[c]ommunity outreach, personalized support, in their own 

language.”354 As previously discussed, they noted that underserved consumers show an interest 

in using both digital and in-person channels. The preference often for in-person transactions 

was partly attributed to the underserved consumer’s frequent use of cash, or needing guidance 

when opening accounts or language barriers. Targeted, sensitive, face-to-face education can 

help underserved consumers move to more sophisticated products and services.

5.1 Suggested areas for further information 

and research

Personal financial management apps: Several commenters suggested more research on 

how underserved consumers (and specific subpopulations) might use mobile tools and the 

impact of such use in areas such as reducing debt and increasing savings.355

Impact analysis of digital analytics: Commenters suggested a need for research to analyze 

the impact that the real-time and location-aware financial mobile services marketplace will have 

on economically vulnerable consumers. These commenters pointed out that there will be 

legitimate advantages for consumers using mobile financial services to obtain product 

information, pricing options, and discounts.356 But commenters also cited potential risks and 

suggested that policymakers could do more research on how and what types of information are 

being shared and how to help inform efforts to prevent discrimination and virtual segregated 

neighborhoods.357

 

354 Javelin, #49, at 6.

355 See CFSI, #6, at 4, 10.

356 FTC, #11, at 1; NCLC, #35, at 1, 6, 22; PIRG and CDD, #19, at 8. 

357 See AFR, #23, at 2-3; PIRG and CDD, #19, at 8. 
78 CONSUMER FINANCIAL PROTECTION BUREAU 

Security: Several commenters suggested that there is a need to promote greater consumer 

awareness regarding important security issues.358 Also, commenters noted that more 

information is needed around the extent to which consumers understand the differences in 

security among operating systems they use or among mobile applications. One commenter also 

suggested research and analysis on how personal and financial security are advanced or 

imperiled by a shift to mobile technologies.359

One commenter, who provides digital security services, outlined various security risks and some 

of the ways technology can be used to provide more security.360 Along with specific examples of 

some actions consumers can take, the commenter also suggested the need for providers to give 

“simple and to the point” messages about mobile security, such as reminders about using a pin 

code and activating the remote location and phone wipeout feature to help if the phone is lost or 

stolen.361

Specific population needs: Several comments pointed to the need for more research on 

specific populations and how they use mobile and access financial services, including issues 

around language and culture, to help identify ways to remove barriers to access, for both mobile 

and physical channels. Commenters pointed out that communities of color and underserved 

consumers are often lumped together but they often have different needs, challenges and use 

patterns. For example, Appleseed commented that there is little information on how nonHispanic immigrants use technology for financial services.362

 Those groups for which comments

suggested more information should be sought include:

 Unbanked and underbanked;

 Rural consumers;

 

358 See, e.g., Deloitte, #44, at 15; EPCOR, #46, at 2; Privacy Rights Clearinghouse, #31, at 1-4. 

359 Appleseed, #41, at 7.

360 See generally Gemalto, #37.

361 Id. at 10.

362 Appleseed, #41, at 4.
79 CONSUMER FINANCIAL PROTECTION BUREAU 

 People with disabilities;

 Consumers with limited English proficiency;

 Recent immigrants;

 Underserved youth or “opportunity youth” (i.e., youth between the ages of 16 and 24 who 

are neither enrolled in school nor participating in the labor market); and

 People residing in traditionally underserved communities.

Use of text messaging: Commenters highlighted the importance of text messaging, pointing 

out that many underserved consumers do not have smartphones and their only way to benefit 

from alerts, etc. would be via text.363 To facilitate effective texting and mobile banking, 

particularly for communities of color, ASOC proposed partnerships with government entities to 

work to better understand the problems and test out the solutions to bring more consumers and 

communities of color into the mobile banking space.364

5.1.1 Moving forward

Commenters provided various suggestions to help make MFS a more viable option for helping to 

empower and improve the financial lives of low-income and economically vulnerable 

consumers, including:

Consumer security toolkit: One suggestion was for financial service providers to develop “a 

simple customer security toolkit, showing consumers how to protect their mobile devices and 

payments data by creating passwords for login and access; using antivirus software to ensure the 

applications downloaded are safe from viruses and malware; loading software that enables the 

 

363 Intuit recommended that CFPB consider the opportunities available to consumers through texting because it may 

“provide real-time information to consumers in a way that they are most likely to read.” Intuit, #21, at 19. 

364 ASOC, #40, at 9.
80 CONSUMER FINANCIAL PROTECTION BUREAU 

phone to be remotely wiped, locked, or deactivated if lost or stolen; and encouraging more 

consumers to set up fraud alerts.”365

Tokenization: To help mitigate the loss associated with data breaches, several commenters 

suggested and highlighted the benefits of tokenization. Tokenization works by substituting a 

sensitive data element with a non-sensitive equivalent “token” that has no extrinsic or 

exploitable meaning or value.366 Using tokens for transactions, known only to the parties to the 

transaction, reduces the digital footprint that enables others to track or steal information.

Privacy: Many commenters suggested the need for consumers to be able to control their 

privacy and access to their data. Some stated a need for additional regulatory mechanisms. 

Other comments from products providers pointed to technology to give consumers the ability to 

control their privacy when data is used in transactions.367 A commenter suggested a box display 

with fees that comes up before any personal information is submitted to help prevent entities 

not involved in a transaction from obtaining personal information.368

 

365 CFSI, #6, at 8. Some comments referred positively to a mobile device feature that allows consumers to remotely 

delete information and disable applications or the device itself as a way to prevent loss, referred to as “kill switch.” 

Consumers Union, #30, at 13; EPCOR, #46, at 2; Gemalto, #37, at 5. One commenter suggested federal legislation 

to require devices to have “kill switch” feature built into all mobile devices. Budnitz, #48, at 5. 

366 See, e.g., Merchant Advisory Group, #39, 1-3 (comments suggested an open and competitive process for security 

standards creation and enforcement and included its support for guiding principles for the creation, maintenance, 

and enforcement of tokenization security standards);VISA, #25. See also, Dwolla, #36, at 2 provided a description 

of its tokenization process. Using an API (Application Programming Interface), it stated that its system removes 

sensitive banking information and: 1) transparently notifies the sender of the additional information and privileges, 

which may be needed by the third party in order to complete the service or deliver value; 2) requires explicit 

authorization from the sender to use said information; 3) provides the receiver with a unique “token” that only the 

authorized receiver can use; and 4) allows the sender or Dwolla to revoke or invalidate the token at any time. 

Dwolla suggested that its design helps its community reduce its digital “financial fingerprint,” offers greater 

transparency to its users and improves privacy controls.

367 See AgeCheq, #9, at 1 (commented that “Over the past few years, mobile device manufacturers have systematically 

removed the ability for a device to be uniquely identified through programming means. This change was prompted 

by privacy concerns, but ironically the removal of device identification has made it impossible for services such as 

ours who seek to help users understand and manage their personal privacy”); PrivacyCheq, 8, at 2; Intuit, #21, at

15.

368 Consumers Union, #35, at 4.
81 CONSUMER FINANCIAL PROTECTION BUREAU 

Public Service Campaigns: One commenter suggested that any campaign encouraging use 

of mobile device software have as a component a Public Service Advertisement campaign 

targeted toward low-income and limited-English proficient communities to help educate about 

the risks of mobile banking to consumers who are new to it.369 

Training: Several comments suggested the need for education and training programs, though 

not as a replacement for consumer protections, that help teach technological literacy (generally 

or focused on specific topics), and recommended training workers who already interact with 

low-income populations to address some of the vulnerabilities as well as the benefits.370 One 

comment identified municipally run financial empowerment centers as examples of appropriate 

places in which to locate such trainings.371

Mobile-enabled websites: One commenter noted that mobile-enabled websites are able to 

detect the size of the user’s screen and provide full website-level services regardless of the access 

device.372 This can help consumers who primarily use smartphones access a broader range of 

financial services features and functions available on the website. 

 

369 MFY Legal, #17, at 3.

370 See, e.g., Appleseed, #41; ASOC, #40; CDCUs, 38; #Deloitte, #15; Privacy Rights Clearinghouse, #31. 

371 MFY Legal, #17, at 3.

372 CFSI, #6, at 4.
82 CONSUMER FINANCIAL PROTECTION BUREAU 

6. Conclusion

The increasing access to and use of mobile technology available to conduct financial transactions 

and manage personal finances presents opportunities and risks for the underserved. 

Commenters suggested that mobile financial services can drive access to products and services 

that meet the needs of the underserved and enhance opportunities for saving time and real time 

money management.373 But several industry and consumer commenters expressed the 

viewpoint that mobile financial services is not a panacea or a silver bullet and “will not undo 

fundamental financial issues that cause some consumers to be underserved.”

374 Commenters 

suggested that while MFS may help people access financial services and products and achieve 

cost savings, the reasons underlying consumers’ use of higher-cost products and the need for 

“in-person consultation” (e.g., brick and mortar) will continue for some time.375 Many noted 

that unless MFS is coupled with strategies to address the underlying issues related to lack of 

access to safe and affordable products, the full potential benefits for low-income and 

underserved consumers will remain elusive.376 In order for MFS to achieve those benefits, 

comments suggest, there needs to be broader digital financial literacy, more confidence that 

appropriate consumer protections are in place and greater comfort with the technology, 

including around security and other potential risks associated with this data driven ecosystem. 

 

373 See discussion supra at pp. 46-52.

374 US Chamber, #42, at 12. See ABA, #45, at 10; CFED, #26.

375 See discussion supra at pp. 49-52, 72-75.

376 See discussion supra at pp. 37-38.