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Uber Technologies Inc. disclosed Aug. 15, 2017, it will cooperate with a proposed consent order by the Federal Trade Commission by implementing stricter privacy guidelines. A court ruling upheld the FTC's proposal for repairing what the commission deemed to be Uber's egregious privacy policies. FTC Acting Chairman Maureen K. Ohlhausen said Uber had both underplayed employee access to databases and failed to secure user and driver information. Uber called one of its publicized practices "Creepy Stalker View," suggesting it was fully aware of its unauthorized and illegal behavior.
Peter Sims, founder and Chief Executive Officer of Parliament Inc., said he was contacted in October 2014 by an attendee at an Uber launch party where the company was streaming celebrity avatars in real time as they took Uber rides in New York City. "After learning this, I expressed my outrage to her that the company would use my information and identity to promote its services without my permission," he later blogged. "She told me to calm down, and that it was all a 'cool' event and as if I should be honored to have been one of the chosen."
In "The payments journey: From point of sale to points of commerce – Part 1", The Green Sheet, April 10, 2017, issue 17:04:01, Dale S. Laszig wrote that the payments industry's history is "replete with examples of wide-scale migrations, from paper to electronic data capture, and from mag-stripe to contact and contactless EMV (Europay, Mastercard and Visa) cards." Only months later, it appears the migration to contactless form factors is escalating. A new study from Juniper Research Ltd. predicted 53 percent of global POS transactions will be contactless within five years, compared to 15 percent this year.
The United States, which was the last developed economy to implement EMV, is expected to experience a significant increase in contactless payments. In POS & mPOS Terminals: Vendor Strategies, Positioning & Market Forecasts 2017-2022, Juniper reported that contactless payment adoption in the United States would rise sharply over the period, from less than 2 percent of transactions this year to 34 percent by 2022.
An Aug. 16, 2017, letter from U.S. Assistant Attorney General Stephen E. Boyd to House Judiciary Chair Bob Goodlatte marked the end of Operation Choke Point (OCP), an anti-crime initiative that put extreme pressure on banks and payment processors to deny services to select high-risk, cash-dependent businesses on the assumption that those businesses were prone to illegal activities and posed a reputational risk to banks. Additional copies of the letter were sent to the U.S. Department of Justice, Federal Reserve and Office of the Comptroller of the Currency.
"Ordinarily speaking, law enforcement moves from the specific to the general," Boyd wrote. "A bad actor is identified and then gradually the net widens to capture co-conspirators or a larger criminal enterprise. OCP started by presuming a whole industry guilty until individual merchants prove their innocence."
OCP was launched in 2013 under the Obama Administration as a joint effort among U.S. regulatory entities, the most prominent being the DOJ, OCC and Federal Deposit Insurance Corp. In the name of reducing fraud and other unscrupulous, illegal business practices in several high-risk industries, the initiative used regulatory powers to heighten supervision of banks that do business with third-party payment processors serving those industries. The goal was to choke off their flow of money, their lifeblood.
The Green Sheet has previously reported on payment companies ‒ Electronic Payments Inc., Vantiv Inc. and ProPay Inc., for example ‒ that have conducted interactive roadshows to augment the training of ISOs, merchant level salespeople and merchants. Such shows have been used to introduce new POS systems, demystify EMV implementation and more. On Aug. 24, 2017, ClearSale heralded a new roadshow. It took place in Mexico the week of Aug. 28 and was devised to address fraud and high chargeback rates in that country.
ClearSale, with U.S. offices in Miami, specializes in chargeback prevention, said the Mexican market "has been a challenge for online merchants, due to a poor reputation for fraud. Chargeback rates from the region are 2.8 times higher than the global average, with decline rates in 2015 being as much as twice that of the global average," adding that "fear of fraud can lead some merchants to avoid transactions with customers whose purchases originate from Mexico." The company also pointed out that false declines can damage a merchant’s reputation, with 32 percent of customers refusing to return to vendors where their purchases were erroneously declined.
Security guidelines, initially proposed by the New York State Department of Financial Services (DFS), became law Aug. 28, 2017. This sparked statewide audits and broad compliance measures among organizations deemed by the department to be "Covered Entities." These include banks, other financial institutions and insurance companies, according to the DFS.
Security analysts see a fundamental shift in the new regulations, which require companies to treat cyber security as a risk management issue and hold senior executives accountable for their companies' security policies, procedures and collaborations with third-party service providers. Maria T. Vullo, DFS Superintendent of Financial Services, introduced the legislation in March 2017, which included a 180-day transitional period to give organizations time to become compliant. Vullo said she expects the new laws to address "the ever-growing threat posed to information and financial systems by nation-states, terrorist organizations and independent criminal actors."
Square Inc., which took the micro merchant segment by storm in 2010 with the rollout of a user-friendly mobile payment dongle and simple pricing program, opened a retail store last week in New York City. Called Showroom, the lower Manhattan storefront serves as a tech support center, showcase for Square products and pop-up store for curated products sold by Square users.
Curious about what the payments community thinks of Square's latest move, The Green Sheet asked a number of industry veterans how they view this development. John Tucker, Managing Member, 1st Capital Loans LLC; Peggy Olson, founder and principal at Strategic Marketing; Steve Norell, Director of Sales for US Merchant Services Inc.; and Jeff Fortney, Vice President, ISO Channel Management at Clearent LLC, all weighed in on the potential success of this new marketing move and whether it contains any takeaways for traditional payment companies.
A federal district court judge in Georgia dismissed a two-year-old enforcement action brought by the Consumer Financial Protection Bureau against several payment processing companies, ruling that the consumer watchdog agency effectively stonewalled the pretrial discovery process.
An attorney who follows the CFPB suggested the court's ruling calls into question the CFPB's understanding of its enforcement powers. "The CFPB has been successful in extracting millions of dollars in consent orders without ever stepping foot in a court room, and certainly without ever engaging in formal discovery subject to the federal rules," Joann Needleman, a practice group leader at the law firm Clark Hill PLC, wrote in a recent blog post at InsideARM.com. "This case may have pulled back the curtain and exposed the bureau's inexperience when it comes to actually litigating a case."
The CFPB filed the civil enforcement action in 2015 against a group that included four payment processing companies over an alleged debt collection scheme that got unwitting consumers to pay off bogus debts. The agency asserted the payment companies facilitated the scam by accepting transactions despite red flags suggesting something was amiss.
On Aug. 28, 2017, wearable fitness device brand Fitbit Inc. unveiled its first smartwatch, Fitbit Ionic. Now available for presale online, it will be stocked at retailers globally starting in October. The Ionic smartwatch features Fitbit Pay, a contactless payment offering that has been in development since Fitbit acquired Silicon Valley-based wearables payment platform Coin in May 2016.
Fitbit Ionic smartwatch users can apparently pay for items directly from the device wherever contactless payments are accepted. "Over the coming months you will be able to add eligible U.S. American Express cards, as well as Mastercard and Visa credit and debit cards from top issuing banks in over 10 markets across the globe," Fitbit stated, noting that it plans to expand into additional markets in the future. During the initial phase, eligible Visa, Mastercard and AmEx cardholders tied to participating banks can make payments using Fitbit Pay. 
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