[Federal Register Volume 79, Number 113 (Thursday, June 12, 2014)]
[Notices]
[Pages 33731-33735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13552]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

[Docket No.: CFPB-2014-0012]


Request for Information Regarding the Use of Mobile Financial 
Services by Consumers and Its Potential for Improving the Financial 
Lives of Economically Vulnerable Consumers

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Notice and request for information.

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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB), 
established under the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act), has as part of its mission to empower 
consumers to take more control over their economic lives. The Bureau is 
charged with promoting financial education, researching developments in 
markets for consumer financial services and products, and providing 
information, guidance, and technical assistance regarding the offering 
and provision of consumer financial products or services to 
traditionally underserved consumers and communities.
    This notice seeks information about how consumers are using mobile 
financial services to access products and services, manage finances and 
achieve their financial goals with a focus on economically vulnerable 
consumers. We use ``mobile financial services'' (MFS) in this Request 
for Information (RFI) to cover mobile banking services and mobile 
financial management services. The RFI does not address mobile point of 
sale (``POS'') payments, except with respect to mobile payment products 
that are targeted specifically for low-income and underserved 
consumers, where it seeks to learn about how such targeting could 
benefit or harm those categories of consumers. The information from the 
responses will be used to inform the Bureau's consumer education and 
empowerment strategies related to developments in these areas.

DATES: Comments must be received on or before September 10, 2014 to be 
assured of consideration.

ADDRESSES: You may submit responsive information and other comments, 
identified by Docket No. CFPB-2014-0012, by any of the following 
methods:
     Electronic: Email [email protected] or go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 
20552.
     Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1275 First 
Street NE., Washington, DC 20002.
    Instructions: Please note the number associated with any question 
to which you are responding at the top of each response (you are not 
required to answer all questions to receive consideration of your 
comments). The Bureau encourages the early submission of comments. All 
submissions must include the document title and docket number. Because 
paper mail in the Washington, DC area and at the Bureau is subject to 
delay, commenters are encouraged to submit comments electronically. In 
general, all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public 
inspection and copying at 1275 First Street NE., Washington, DC 20002, 
on official business days between the hours of 10 a.m. and 5 p.m. 
Eastern Standard Time. You can make an appointment to inspect the 
documents by telephoning 202-435-7275.
    All submissions, including attachments and other supporting 
materials, will become part of the public record and subject to public 
disclosure. Sensitive personal information, such as account numbers or 
Social Security numbers, or names of other individuals, should not be 
included. Submissions will not be edited to remove any identifying or 
contact information.

FOR FURTHER INFORMATION CONTACT: For general inquiries, submission 
process questions or any additional information, please contact Monica 
Jackson, Office of the Executive Secretary, at 202-435-7275.

SUPPLEMENTARY INFORMATION: A major development in the consumer 
financial services market over the past few years has been the 
increasing use and proliferation of mobile technology to access 
financial services and manage personal finances. For example, last year 
74,000 new customers a day began using mobile banking services. Using a 
mobile device to access accounts and pay bills can reduce cost and 
increase convenience for consumers. By enabling consumers to track 
spending and manage personal finances on their devices through mobile 
applications or text messages, mobile technology can help consumers 
achieve their financial goals. For the economically vulnerable, mobile 
can enhance access to safer, more affordable products and services in 
ways that can improve their economic lives.
    Consumer use of mobile financial services and products--offered by 
financial institutions, financial technology product developers and 
providers--has increased over the past few years. According to the 
Federal Reserve Board's most recent survey on mobile financial 
services, 93 percent of mobile banking users used mobile banking to 
check account balances or recent transactions and 24 percent of 
smartphone users have used their phone to track purchases and expenses 
during the preceding year. One third (up from 21 percent in 2011) of 
mobile phone users and over half (up from 42 percent in 2011) of 
smartphone users used mobile banking services. In the underbanked 
population, however, a larger percentage of mobile phone users reported 
using mobile banking (39 percent) in the previous 12 months (compared 
to 17 percent for all phone users).\1\
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    \1\ Bd. of Governors of the Fed. Reserve Sys., Consumers and 
Mobile Financial Services 2014 (2014) available at http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf, at 1-4.
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    Mobile financial services have been identified as having the 
potential to expand access to more underserved populations.\2\ A large 
percentage of unbanked and underbanked consumers, many of whom are low-
income, have access to mobile phones, a significant number of which are 
smartphones--69 percent of the unbanked have access to a mobile phone, 
half of which are smartphones; 88 percent of the underbanked have 
access to a mobile phone, 64 percent of which are smartphones.\3\ A 
majority of unbanked

[[Page 33732]]

households are low-income (81 percent earn below $30,000) and a 
substantial proportion of consumers in this income bracket (45 percent) 
who use their mobile phone to access the Internet do so as their 
primary way to access it.\4\
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    \2\ See, e.g. Elisa Tavilla, How Mobile Solutions Help Bridge 
the Gap: Moving the Underserved to Mainstream Financial Services, 
December 2013 at 21-23 available at, http://www.bostonfed.org/bankinfo/payment-strategies/publications/2013/how-mobile-solutions-help-bridge-the-gap.html.
    \3\ Mobile Financial Services Survey 2014, Id. at 1-2 (2014). 
Note that in a recent White Paper, Susan Burhouse, Matthew Homer, 
Yazmin Osaki, Michael Bachman, Assessing the Economic Inclusion 
Potential of Mobile Financial Services,'' April 23, 2014 at 16 
available at, http://www.fdic.gov/consumers/community/mobile/Mobile-Financial-Services-and-Economic-Inclusion-04-23-2014revised.pdf, 
authors reported that in the 2013 FDIC Survey of Unbanked and 
Underbanked Households (October 2014 forthcoming), 90 percent owned 
a mobile phone, of which 71 percent are smartphones.
    \4\ Id. at 18 (citing FDIC 2011 Household Survey and Pew 
Research Center, September 16, 2013).
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    Accessing financial products, services, and financial management 
tools via mobile devices has the potential to empower consumers to take 
more control over their financial lives, to increase savings and reduce 
debt. Such use can:
     Help consumers access financial services that meet their 
needs. Whether provided by banks or nonbanks, mobile financial services 
can enable consumers to access myriad products and services that they 
may not be able to access due to location (not within their community), 
cost or other barriers to access.
     Make access to financial services less expensive for 
consumers and incentivize providers. For example, bill payments, which 
can be costly and time-consuming for consumers using cash, may be 
cheaper, faster and easier using mobile.\5\ As acknowledged in a recent 
White Paper from FDIC, ``[a]lthough there are short-term costs and 
uncertainties associated with MFS, many industry reports indicate it 
has potential to reduce the cost of providing banking services.'' \6\ 
One industry estimate cited in the White Paper calculated the average 
cost of an in-branch transaction was $4.25 whereas the average cost was 
$0.10 for a mobile transaction.\7\
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    \5\ Tavilla, How Mobile Solutions Help Bridge the Gap, Id. at 
12.
    \6\ Susan Burhouse, Matthew Homer, Yazmin Osaki, Michael 
Bachman, Assessing the Economic Inclusion Potential of Mobile 
Financial Services, April 23, 2014 at 29-30 available at, http://www.fdic.gov/consumers/community/mobile/Mobile-Financial-Services-and-Economic-Inclusion-04-23-2014revised.pdf.
    \7\ Id.
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     Help with money management to help consumers increase 
savings and reduce debt. Mobile presents a faster and easier way to 
access products and manage money through various features such as 
online account opening, checking account balances, account alerts, 
faster funds transfer, remote deposit, and bill payment, which can 
enhance the consumer's ability to save, pay bills on-time and more 
cheaply. For example, in the Federal Reserve's Board 2013 survey, 69 
percent of mobile banking users reported that they checked their 
account balance before making a large purchase and half of them decided 
not to make purchase as a result of their account balance or credit 
limit.\8\
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    \8\ FRS, Mobile Financial Services Survey 2014, Id. at 2, 19.
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    Given the increasing use of mobile financial services \9\ and its 
potential benefits, the Bureau seeks information on how mobile 
financial services can be used to empower and address the financial 
needs of consumers in affordable and safe ways. Specifically, we are 
seeking information on:
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    \9\ Javelin Strategy and Research, ``Mobile Banking, Tablet and 
Smartphone Forecast 2013-2018: Smart Device Adoption Drives Mobile 
Banking Boom in 2013'', March 2014 (95 million U.S. adults used 
mobile banking--a gain of 27 million mobile bankers over 2012, or 
74,000 per day). Accessed summary of report and blog at https://www.javelinstrategy.com/brochure/318/on May 23, 2014.
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    1. The general use of these mobile financial services and the 
opportunities this technology presents for addressing the needs of 
consumers, with a focus on economically vulnerable populations, 
including enhancing access to convenient financial services, 
facilitating effective account management by consumers, and building 
financial capability by creating increased ease in money management by 
use of personal financial management mobile tools;
    2. Barriers to low-income, underserved or economically vulnerable 
consumers accessing and using mobile technology for financial services; 
and
    3. Potential consumer protection issues associated with the use of 
such mobile technology for financial services by economically 
vulnerable consumers.
    The Bureau encourages comments from all members of the public, 
including:
     Individual consumers.
     Community groups.
     Consumer groups.
     Groups addressing issues affecting specific populations, 
including older Americans, people with disabilities, low-income, 
underserved or economically vulnerable consumers, recent immigrant and 
other groups.
     Academics and other researchers.
     Providers of financial services.
     Financial institutions.
     Providers and developers of mobile technology designed to 
address financial services needs and personal financial management.
     Payments providers.
     Telecommunications firms.
     Regulators.
     Social service providers, particularly those that serve 
low-income, underserved or economically vulnerable consumers.
    When responding to any of the questions, for the product, service 
or technology that is the subject of the response, please include 
information about how it is rolled out or marketed to consumers; which, 
if any, specific population it is targeting; how it is brought to 
scale; and any challenges linking the product, service or technology to 
its intended targeted population.

Mobile Financial Services (Mobile Banking and Mobile Financial 
Management Services) To Enhance Access and Opportunities for Consumers

    (1) What are some of the ways in which consumers use mobile 
technology to access financial services? What are some of the benefits 
to consumers of enhanced access via mobile?
    (2) How would making access via mobile differ from or improve 
overall access compared to only accessing financial services through an 
online channel?
    (3) Based on your experience, what percentage of customers access 
accounts at financial institutions via mobile? Has there been any 
research that sheds light on level of use by income strata, age, or 
other demographic factors?
    (4) Is there evidence of lower costs to service providers and/or to 
consumers when providing mobile financial services? Identify how those 
cost savings are achieved.
    a. For which type of account or transaction does mobile reduce 
cost? Why?
    b. Are there examples of tracking cost savings when products were 
made available via mobile or when consumers opt in to accessing 
products and services via mobile?
    c. Which products or services hold the most potential in terms of 
reducing costs of delivery and distribution to underserved consumers 
and communities? Please describe.
    (5) How can mobile financial services be brought to scale in ways 
that reach more consumers across the economic spectrum?
    a. What are examples of financial services and products brought to 
scale via mobile in ways that assist low-income consumers?
    b. Are there actions the federal government can take to enhance 
opportunities for providing services and products via mobile for 
economically vulnerable consumers at scale?
    c. What role can and should third-party retail agents serve in 
providing financial products? Are there barriers that limit the ability 
of financial institutions to use third-party retail agents to provide 
mobile financial

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services? Does using third-party retail agents pose current and/or 
future risks to consumers?
    (6) How are financial service providers marketing mobile financial 
services? To underserved populations?
    a. What types of marketing or outreach methods, including 
partnerships with nonprofits and other entities, have been effective in 
increasing the numbers of underserved who use mobile financial 
services?
    b. What are examples of financial institutions using mobile devices 
for their employees to engage in outreach or provide services to 
underserved communities? What types of services can be provided 
remotely by employees using mobile devices in communities, e.g., 
account opening, deposits, etc.?
    (7) The 2014 FDIC White Paper identified that while MFS has the 
potential to help the underserved gain access to the banking system, 
MFS on a standalone basis appears to have a ``limited role in 
motivating and facilitating the unbanked access to the financial 
mainstream.'' \10\ Are there successful approaches to enhance access to 
financial services for the unbanked, whether it is via bank or nonbank 
providers?
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    \10\ Burhouse, Assessing the Economic Inclusion, Id. at 3.
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Specific Types of Mobile Financial Products and Services, Including 
Personal Financial Management Applications and Features

    (8) Are there any examples of or research on the use of mobile 
technology to enhance savings opportunities or habits for consumers? 
For economically vulnerable consumers?
    (9) Are there certain kinds of products or services that are more 
promising than others in terms of being adapted to mobile environment 
for the underserved market? Why?
    a. Deposit products?
    b. Point-of-sale transactions?
    c. Paying for purchase of products and services remotely?
    d. Bill payments?
    e. Overall money management products, including apps that enhance 
ability to manage money or set and meet financial goals?
    f. Remote deposit capture (RDC)? \11\
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    \11\ Remote deposit capture (RDC) as used here refers to ability 
of consumer to deposit a check remotely by using the camera on a 
mobile device.
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    (10) Are there specific types of current or potential innovations 
that have been identified by community groups, consumer advocates, 
educators, or others as helpful to the underserved?
    a. Could expansion of mobile help move consumers from higher-cost 
products to lower-cost products? Please explain.
    (11) How are loyalty and rewards programs being used for mobile 
financial services? What are some innovative programs that may help the 
underserved market: (1) Access more affordable financial services and 
products, and (2) achieve their financial goals?
    (12) Many low-income consumers use prepaid products for their daily 
financial transactions. What opportunities are there for low-income 
consumers to use these products via mobile devices?
    (13) Are there examples of financial service providers, 
individually or in partnership with intermediaries or third-party 
agents, offering financial education or financial capability 
interventions or tools as part of their mobile financial services 
offerings? Have any of these efforts been shown to be effective in: (1) 
Bringing more underserved consumers into mobile financial services; or 
(2) enhancing the financial capability of underserved consumers to 
reach their goals.
    (14) Consumers can check account balances, use account alerts to 
avoid fees or transfer funds, set aside funds for long or short term 
goals. Some of these features provide convenience while others can help 
track spending and manage money. What are examples of features offered 
by mobile financial services designed to advance the financial goals of 
consumers? What are some examples of successful use of features to 
advance financial goals? Please explain.
    (15) Given the significant level of cash usage within the low-
income population,\12\ are there mobile financial services or products 
that enable consumers to use their cash to pay for goods and services 
remotely?
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    \12\ Barbara Bennett, Douglas Conover, Shaun O'Brien, and Ross 
Advincula, Cash Continues to Play a Key Role in Consumer Spending: 
Evidence from the Diary of Consumer Payment Choice, April 2014 at 10 
(Figure 11--those living in households with less than $25,000 of 
income used cash for 57% of their transactions) available at http://www.frbsf.org/cash/publications/fed-notes/2014/april/cash-consumer-spending-payment-diary.
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    (16) Making payments for goods and services by charging them to 
mobile phone bills has been suggested as a way for unbanked consumers 
to be able to make electronic payments. What are the risks, if any, for 
these consumers? What are potential benefits for the unbanked and 
underserved?

Opportunities for Population Subgroups

    (17) The following subgroups of consumers face unique challenges in 
accessing financial products and services in ways that can improve 
their ability to meet their financial goals. Please respond to the 
questions for one or more of the individual subgroups.
     Unbanked and underbanked.
     Rural consumers.
     People with disabilities.
     Consumers with limited English proficiency.
     Recent immigrants.
     Underserved youth or ``opportunity youth'' (i.e., youth 
between the ages of 16 and 24 who are neither enrolled in school nor 
participating in the labor market).
     People residing in traditionally underserved communities.
    a. What are the barriers and challenges to using mobile to enhance 
access that are specific to these groups of consumers?
    b. What efforts have financial services providers, intermediaries, 
or third-party agents and community groups undertaken to serve the 
following groups of consumers via mobile?
    c. Are there examples of current mobile financial services that 
have been developed specifically to address the needs of these 
consumers, or services that may specifically benefit these consumers, 
e.g., Remote Deposit Capture (RDC)?
    d. Are there examples of successes in reaching these consumers and/
or in helping these consumers reach their financial goals, and if so, 
what has contributed to the success?
    e. Are there additional consumer protections needed to address 
unique risks or barriers faced by these groups? Explain and please 
provide examples.

Challenges and Barriers To Expanding Use and Reach of Mobile Financial 
Services, Particularly for Economically Vulnerable Populations

    (18) Privacy and security concerns have been cited as reasons 
consumers do not use mobile banking and mobile financial management 
services. What are the specific types of privacy and security concerns? 
What actions should consumers take to protect their information and 
identity? Are there products, services or features that address these 
concerns? What mechanisms should exist to disable use of stolen or 
mislaid mobile devices that are enabled to provide financial services?
    (19) What impediments are there to consumers opening a transaction 
or

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savings account remotely via mobile or online?
    (20) What types of customer service or technical assistance 
concerns are there in the context of mobile financial services? For 
example, should consumers always have access to a customer service 
telephone number and/or call center?
    a. What methods are used to ensure consumers know when transactions 
are completed and funds available? Are additional methods needed?
    b. Do customer service levels vary depending on the dollar size of 
the mobile transactions?
    (21) What are some of the distinct challenges for financial service 
providers, including financial institutions, to offer mobile financial 
services to economically vulnerable consumers? Please describe in terms 
of these categories.
    a. Technical, including technology and operational.
    b. Regulatory.
    c. Cost.
    d. Marketing.
    e. Other.
    (22) What challenges and barriers exist for economically vulnerable 
consumers to access mobile financial services?
    a. Technological, including accessibility of devices and 
telecommunications services.
    b. Educational, including the level of understanding or knowledge 
about using financial products and services via mobile.
    c. Regulatory.
    d. Security and privacy concerns related to accessing mobile 
financial services, e.g., do lower cost platforms or devices carry less 
security and privacy protections?
    e. Costs, including cost of data plans.
    f. Language barriers.
    (23) What are the concerns, if any, related to access for 
underserved consumers and communities if increased use of mobile 
financial services results in fewer bank branches? Is there any 
research on the impact on bank physical locations when a significant 
number of customers use mobile financial services? Are there efforts to 
expand branch reach by using mobile technology to provide branch 
functions in the community, away from the branch? Please describe.

Consumers' Understanding of Risks Involved in Using Mobile Financial 
Services and Steps To Protect Them

    (24) Various groups representing consumers have identified risks to 
low-income consumers when engaging in financial transactions via 
mobile, lack of accountability for all entities involved in the 
transactions, the ``single point of failure'' when consumers lose 
access to their mobile device and cannot access their financial 
accounts, possible move away from paper receipts or statements, and the 
use of data in ways that may promote products that pose risk to low-
income consumers. What core principles would help ensure that 
underserved consumers are protected when engaging in financial 
transactions through mobile?
    (25) Are there ways that financial management services or features 
can be used to prevent fraud or theft? What type of information would 
be helpful for consumers to know to avoid fraud or theft?
    (26) Security concerns have been cited as a reason why some 
consumers have decided not to use mobile banking. Are data breaches 
more common with mobile financial services relative to online financial 
services generally? Are they more common compared to traditional 
channels, e.g., phone, ATMs?
    (27) In terms of security with regard to accessing or transferring 
financial data:
    a. Are certain types of mobile devices less secure than others in 
terms of transferring financial data?
    b. Are certain types or levels of mobile services less secure than 
others?
    c. Is there greater risk of compromised or stolen information in 
more remote areas where signals may be weaker?
    d. How are consumers informed of risks associated with the types of 
devices they may be using or the types of plans/services they may have?
    (28) What risks does segmentation of the market through data 
created by mobile use present for underserved consumers? Is there a 
risk that data will be used to direct underserved consumers to higher-
cost products and services than they would otherwise be eligible to 
purchase and that may pose greater risk of financial harm? Are low 
income consumers less likely to detect hidden fees, and, if so, does 
special attention need to be provided to the design of mobile payments 
products targeted at low income consumers? Is there any research that 
would help inform the data segmentation issue?
    (29) What are the types of fraud risk that low-income consumers may 
be exposed to when using mobile device to access financial services and 
products? Is the risk greater or less via mobile compared to accessing 
financial services online? Is the risk greater or less compared to 
using credit and debit cards or other means to access financial 
services? Please explain.
    (30) Many low-income consumers use cell phones (phones without 
operating systems).
    a. How are financial services providers, intermediaries and third-
party agents using ``texting'' or other means to communicate with 
consumers via cell phones?
    b. What are the challenges and barriers to communicating through 
``texting'' for financial services and products?
    c. Are there additional protections needed that may affect 
providers' ability to market or advertise to consumers via ``text''?
    d. How have providers increased consumer use of text alerts? Please 
describe.
    (31) A significant percentage of low-income consumers mostly use 
their phone to go online. Are privacy concerns different depending on 
whether consumers access services online via a computer or via a phone 
or mobile application? \13\
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    \13\ Pew Charitable Trusts, Pew Research Internet Project, 
``Cell Internet Use 2013'' (45% of cell internet users living in 
households with an annual income of less than $30,000 mostly use 
their phone to go online, compared with 27% of those living in 
households with an annual income of $75,000 or more). Accessed 
online at http://www.pewinternet.org/2013/09/16/main-findings-2/ on 
May 23, 2014.
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    (32) Are there unique challenges or risks associated with prepaid 
phones (pay-as-you-go or monthly) when using them to access financial 
services?
    (33) Are additional financial consumer protections needed to 
protect low-income or otherwise economically vulnerable consumers in 
the use of mobile financial services? Please explain.
    a. Are additional protections needed to protect consumers' access 
to their financial accounts when they do not have access to their 
device because of loss, theft or non-payment of cell phone bill?
    b. Are there risks to consumers when third-party agents are used to 
facilitate transactions or provide other products via mobile?

International Experience in Using Mobile Technology To Enhance Access 
and Increase Financial Capability of Economically Vulnerable Consumers

    It has been widely reported that mobile financial services are 
being used successfully in other countries to increase access for low-
income consumers. These examples may shed light on how mobile 
technology could be used in ways designed to improve account access, 
use of safe and low-cost payments and the availability of tools to

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support money management for the economically vulnerable consumers in 
this country.
    (34) Are there useful international examples of the spread of 
mobile technology for financial services that enhance access for low-
income consumers? What differences would or should apply if these 
approaches were adapted for the U.S. context?
    (35) Does mobile technology offer enhanced possibilities for direct 
person-to-person international money transmittal? Does this bring with 
it greater risk of theft, fraud or money laundering?

    Authority: 12 U.S.C. 5511(c).

Christopher D'Angelo,
Chief of Staff, Bureau of Consumer Financial Protection.
[FR Doc. 2014-13552 Filed 6-11-14; 8:45 am]
BILLING CODE 4810-AM-P