JYA has the complete version of this, but I wanted to make a comment that this allegedly pro-consumer group is wanting mandatory receipts - decidedly anti-privacy. Typical; Consumer Reports keeps calling for limits on what can be made available instead of making the information available and letting people decide on their own. There is also the problems associated with welfare-on-a-card - namely limits on what can be purchased, a requirement for full identity disclosures, etcetera. I'd call this effort by government also a form of the pressure-by-economics we saw with the initial Clipper proposal (leaving aside the actual agenda), namely using government purchasing to distort the market (away from anonymous digital cash, in this case). The last statement also brings up the question of why shouldn't banks move out of high-crime areas? I'd appreciate lower bank fees, and so would most people. -Allen
_________________________________________________________________ Centura _________________________________________________________________ REGULATORS TURN SPOTLIGHT ON CYBERMONEY __________________________________________________________________________ Copyright © 1996 Nando.net Copyright © 1996 N.Y. Times News Service
(Sep 19, 1996 00:41 a.m. EDT) -- As concerns grow about electronic money-laundering, cybercounterfeiting and bank runs on the Internet, regulators in the United States and around the world are scurrying to catch up with the rapid development of electronic money.
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Moreover, there is now no requirement that a company that issues stored-value cards must be a bank or be regulated in any other way. That raises the question whether these cards, if they become popular, will become as unruly as the market for prepaid telephone cards, in which a number of card vendors have failed to deliver the calls that were promised.
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To prevent such problems, a number of other countries have decided to require that stored-value cards be issued only by banks.
The Federal Reserve has issued proposals on whether the consumer protections guaranteed for other electronic-funds transfers -- like direct deposits and debit cards -- will apply to stored-value card purchases. These protections include the requirement of receipts with every purchase and a limit on liability if a card is lost or stolen.
The Fed has proposed that card systems that cannot hold more than $100 and those that have no central records of how much money is on each card be exempt from the strict consumer-protection rules.
"The Fed proposal is destroying consumer protection," said Janice Shields, the consumer-research director for the U.S. Public Interest Research Group in Washington. "They don't want to disclose error-resolution procedures, and they want unlimited consumer losses."
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One force pushing the development of the technology, however, is the government itself, which has mandated that by 1999 all payments to or from government accounts must be made electronically. This may have the most significant effect on the recipients of various welfare programs, many of whom now do not have bank accounts that could receive an electronic money transfer.
To deal with this, various groups of state governments are developing special cards on which benefits payments will be stored. Recipients will be able to use the cards to withdraw cash at automated teller machines and to make purchases.
One of the thorniest issues is whether holders of these welfare cards get the same protections as holders of credit and debit cards issued by banks. State and local governments do not want to absorb the cost of issuing refunds, for example, though some readings of the electronic funds transfer act would require that they do.
Some are also concerned that as banks move more toward offering their services electronically, they will have more reason to close branches in inner-city areas.
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Copyright © 1996 Nando.net