The Financial Consumer Agency of Canada is warning Canadian consumers about the risks of malware and customer profiling associated with mobile payments. The financial services industry watchdog is developing information to help consumers understand how m-payments work and what their implications are.

According to a study published by the FCAC, the introduction of mobile payments into the Canadian marketplace brings both convenience and potential risks for Canadian consumers.

The study, titled "Mobile Payments and Consumer Protection in Canada," examines the extent to which Canadian financial consumers are protected when making m-payments.

The study's key highlights are:

• Users of m-payments in Canada are not all protected equally, as consumer protection obligations vary by service provider.
• Mobile devices represent an opportunity to improve disclosure by informing consumers and seeking consent in real time.
• M-payment service providers may sell user data to third-party marketers, who then target consumers with advertising based on demographic, behavioral and geographic information. This practice, known as profiling, may provide benefits to consumers, but it may also pose new risks, particularly when products are marketed to vulnerable consumers.
• The number of stakeholders involved in an m-payment transaction may increase the level of complexity related to dispute resolution and redress. In the event of an error or unfair treatment, a consumer may be unsure about how or where to file a complaint or obtain redress.

The FCAC said it will use the study findings for consumer education. It wants to make Canadians more aware of profiling and malware threats and the ways they can best protect themselves.

The organization also wants to ensure that federally regulated financial institutions, payment card network operators and external complaints bodies comply with legislation and industry commitments intended to protect consumers.

The FCAC was set up by the Canadian government in 2001 as an independent body chartered with protecting and informing consumers of financial services. It was given oversight of the Canadian payment card networks in 2010.

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