CFPB defines consumer protection principles for faster payments

July 10, 2015

WASHINGTON (7/10/15)--New payments systems should be secure, transparent, accessible and affordable to consumers, according to guiding principles released Thursday by the Consumer Financial Protection Bureau (CFPB).

The principles were released as the private sector develops faster payments systems and looks ahead to new technologies making it easier for consumers to use them.

When it comes to non-cash transactions, today’s payments system involves the automated clearing house, PIN debit, wire network or check services, as well as a wide range of participants such as payers, payees, providers, institutions and operators.

These entities are subject to operator, private network and government rules, as well as a number of regulations.

According to the bureau, consumers benefit from use of the payments system, but a number of opportunities exist to improve efficiency and reduce fraud risks.

Specifically, the CFPB recommends keeping these consumer protection principles in mind when building a faster payments system:

  • Give consumers control over payments, including allowing them to limit the time period for which a payment authorization is valid, the amount and the payee. Specific procedures should allow consumers to revoke authorizations at any time;
  • For data privacy, the system should allow consumers to specify such things what data may be  transferred during a transaction, whether a third party can access the data and how the data can be used;
  • To fight fraud and promote error resolution, a system's architecture should ensure that information is created and recorded to facilitate post-transaction evaluation, in part  to be used in reversing erroneous and unauthorized transactions;
  • Transparency is enhanced by allowing real-time access to information about transaction status, as well as proper disclosures of risk, costs, funds availability and payment security; and
  • To enhance security, systems should have strong built-in protections to detect and limit errors, unauthorized transactions and fraud. These systems should also limit the value of consumer payment credentials so security breaches are minimally harmful to consumers.