Before the Grand Rethinking: Five Things to Do Today with Payments Law and Ten Principles to Guide New Payments Products and New Payments Law

This article describes the incomplete consumer protection and illogical results now occurring from the application of current federal consumer protection law to a broad variety of types of payments products used by individuals that were developed long after the relevant federal laws were written. The lag in payments law has real impacts on consumers. The adverse consequences include the mistaken assumption of rights that do not exist,; individuals losing of control of their checking accounts; and that the consumer\u27s rights may depend upon the choices made by merchants, processors, and banks. Surprisingly, the most fiscally dangerous payment choice for an individual—the credit card—is the one with the best consumer protections. Individuals who carry a credit card balance, however, face a much higher cost to obtain those protections than those with the economic cushion to pay off their balances every month. This article proposes a baseline level of consumer protection for all existing and new payments mechanisms used by individuals. This includes credit and debit cards, checks, non-card payment devices such as the cell phone, and emerging payments methods such as placing a charge on a services account bill, such as a phone bill. To create this protection, the article proposes specific statutory changes to the Federal Electronic Fund Transfer Act, the Fair Credit Billing Act, and the Expedited Funds Availability Act, plus expanded use of financial institution regulators\u27 power to restrict unfair and deceptive trade practices. The article further offers a set of ten principles by which payments providers, legislators, regulators, and consumers should judge new payments mechanisms