Apple Pay

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Apple settles EU probe by opening up its mobile payments system

A small price to pay? —

iPhone users will get more choices to make “touch-and-go” payments in the EU.

Apple settles EU probe by opening up its mobile payments system

In two weeks, iPhone users in the European Union will be able to use any mobile wallet they like to complete “tap and go” payments with the ease of using Apple Pay.

The change comes as part of a settlement with the European Commission (EC), which investigated Apple for potentially shutting out rivals by denying access to the “Near Field Communication” (NFC) technology on its devices that enables the “tap and go” feature. Apple did not develop this technology, which is free for developers, the EC said, and going forward, Apple agreed to not charge developers fees to provide the NFC functionality on its devices.

In a press release, the EC’s executive vice president, Margrethe Vestager, said that Apple’s commitments in the settlement address the commission’s “preliminary concerns that Apple may have illegally restricted competition for mobile wallets on iPhones.”

“From now on, Apple can no longer use its control over the iPhone ecosystem to keep other mobile wallets out of the market,” Vestager said. “Competing wallet developers, as well as consumers, will benefit from these changes, opening up innovation and choice, while keeping payments secure.”

Apple has until July 25 to follow through on three commitments that resolve the EC’s concerns that Apple may have “prevented developers from bringing new and competing mobile wallets to iPhone users.”

Arguably, providing outside developers access to NFC functionality on its devices is the biggest change. Rather than allowing developers to access this functionality through Apple’s hardware, Apple has borrowed a solution prevalent in the Android ecosystem, Vestager said, granting access through a software solution called “Host Card Emulation mode.”

This, Vestager said, provides “an equivalent solution in terms of security and user experience” and paves the way for other wallets to be more easily used on Apple devices.

An Apple spokesperson told CNBC that “Apple is providing developers in the European Economic Area with an option to enable NFC contactless payments and contactless transactions for car keys, closed loop transit, corporate badges, home keys, hotel keys, merchant loyalty/rewards, and event tickets from within their iOS apps using Host Card Emulation based APIs.”

To ensure that Apple Pay is on an equal playing field with other wallets, the EC said that Apple committed to improve contactless payments functionality for rival wallets. That means that “iPhone users will be able to double-click the side button of their iPhones to launch” their preferred wallet and “use Face ID, Touch ID and passcode to verify” their identities when using competing wallets.

Perhaps most critically for users attracted to Apple’s payment options convenience, Apple also agreed to allow rival wallets to be set as the default payment option.

These commitments will remain in force for 10 years, Vestager said.

Apple did not immediately respond to Ars’ request for comment. Apple’s spokesperson confirmed to CNBC that no changes would be made to Apple Pay or Apple Wallet as a result of the settlement.

Apple’s commitments go beyond the DMA

Before accepting Apple’s commitments, the EC spoke to “many banks, app developers, card issuers, and financial associations,” Vestager said, whose feedback helped improve Apple’s commitments.

According to Vestager, Apple’s changes go beyond the requirements of the EU’s strict antitrust law, the Digital Markets Act, which “requires gatekeepers to ensure effective interoperability with hardware and software features that they use within their ecosystems,” including “access to NFC technology for mobile payments.”

Beyond the DMA, Apple agreed to have its compliance with the settlement “ensured by a monitoring trustee,” as well as to provide “a fast dispute resolution mechanism, which will also allow for an independent review of Apple’s implementation.”

Vestager assured all stakeholders in the European Economic Area that these changes will prevent any potential harms caused by Apple seeming to shut other wallets out of its devices, which “may have had a negative impact on innovation.” By settling the yearslong probe, Apple avoided a potentially large fine. In March, the EC fined Apple nearly $2 billion for restricting “alternative and cheaper music subscription services” like Spotify in its app store, and the suspected anticompetitive behavior in Apple’s payments ecosystem seemed just as harmful, the EC found.

“This reduction in choice and innovation is harmful,” Vestager said, confirming that the settlement concluded the EC’s probe into Apple Pay. “It is harmful to consumers and it is illegal under EU competition rules.”

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Apple abruptly abandons “buy now, pay later” service amid regulatory scrutiny

Apple abruptly abandons “buy now, pay later” service amid regulatory scrutiny

Apple has abruptly discontinued its “buy now, pay later” (BNPL) service, Apple Pay Later, which turned Apple into a money lender when it launched last March in the US and became widely available in October.

The service previously allowed users to split the cost of purchases of up to $1,000 into four installments that were repaid over six weeks without worrying about extra fees or paying interest. For Apple, it was likely a move to increase total Apple Pay users as the company sought to offer more core financial services through its devices.

Now, it appears that Apple has found a different route to offer short-term loans at checkout in Apple Pay. An Apple spokesperson told 9to5Mac that the decision to end Apple Pay Later came ahead of the company’s plan to start offering new types of installment loans globally.

“Starting later this year, users across the globe will be able to access installment loans offered through credit and debit cards, as well as lenders, when checking out with Apple Pay,” Apple’s spokesperson said. “With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the US.”

Apple also noted its decision to kill off the service on a support page posted Monday, confirming that “Apple Pay Later is no longer offering new loans.” Apple specified that all “existing Apple Pay Later loans and purchases are not affected,” and loans can continue to be managed through users’ wallets.

One of the biggest challenges for BNPL customers is often seeking a refund for returned purchases, but Apple has assured Apple Pay Later customers that the refund process has not changed for any existing purchases. Customers can contact Apple Support if they have “trouble with a refund,” Apple’s support page said.

Apple announced its new installment loan program at its recent annual developer event, confirming that it had partnered with banks, including Citi in the US, to provide short-term loans as a payment option in its upcoming iOS 18 operating system due out before the end of 2024. Apple’s spokesperson told 9to5Mac that unlike Apple Pay Later, which was only available in the US, installment loans will be an option offered in more countries.

“Our focus continues to be on providing our users with access to easy, secure, and private payment options with Apple Pay, and this solution will enable us to bring flexible payments to more users, in more places across the globe, in collaboration with Apple Pay enabled banks and lenders,” Apple’s spokesperson said.

In a blog post, Apple described new features “available for any Apple Pay-enabled bank or issuer to integrate in supported markets.” These features allow users to “view and redeem rewards, and access installment loan offerings from eligible credit or debit cards, when making a purchase online or in-app with iPhone and iPad,” the blog said. For users in the US, Apple will soon make it easy to “apply for loans directly through Affirm when they check out with Apple Pay.”

A brief history of short-lived Apple Pay Later

The iPhone maker rolled out Apple Pay Later in March 2023, just after BNPL services fell under scrutiny by regulators globally, The Verge reported in 2022. Early studies found that “BNPL users are twice as likely to overdraft” and estimated that 43 percent of younger BNPL users have missed a payment.

A fear quickly arose that Apple Pay Later might “normalize” reliance on BNPL lending for frivolous large purchases that customers might then struggle to repay, The Verge reported. BNPL had already become hugely popular with Gen Z shoppers eager to purchase the latest TikTok fashions they may not otherwise be able to afford, The Verge noted.

In 2021, the US Consumer Financial Protection Bureau (CFPB) launched an inquiry into BNPL, flagging emerging potential consumer risks in 2022. Those included privacy risks from data harvesting and excessive debt accumulation from frequently reported borrower overextension.

However, despite emerging concerns about BNPL, Apple Pay Later was immediately popular, according to a JD Power survey of 8,000 consumers. In the first three months that the service was available, nearly one-fifth of BNPL customers used Apple Pay Later. With its BNPL offering, Apple attracted new customers who were interested in trying a new BNPL service from a trusted brand, JD Power reported, posing an immediate threat to BNPL services offered by “traditional payments juggernauts” like PayPal.

At that time, Apple was well-positioned to provide short-term loans, JD Power reported, finding that the “average Apple Pay Later user tended to be more financially healthy than most other BNPL customers, potentially giving it a more sustainable user base than its competitors.”

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US woman arrested, accused of targeting young boys in $1.7M sextortion scheme

Preventing leaks —

FBI has warned of significant spike in teen sextortion in 2024.

US woman arrested, accused of targeting young boys in $1.7M sextortion scheme

A 28-year-old Delaware woman, Hadja Kone, was arrested after cops linked her to an international sextortion scheme targeting thousands of victims—mostly young men and including some minors, the US Department of Justice announced Friday.

Citing a recently unsealed indictment, the DOJ alleged that Kone and co-conspirators “operated an international, financially motivated sextortion and money laundering scheme in which the conspirators engaged in cyberstalking, interstate threats, money laundering, and wire fraud.”

Through the scheme, conspirators allegedly sought to extort about $6 million from “thousands of potential victims,” the DOJ said, and ultimately successfully extorted approximately $1.7 million.

Young men from the United States, Canada, and the United Kingdom fell for the scheme, the DOJ said. They were allegedly targeted by scammers posing as “young, attractive females online,” who initiated conversations by offering to send sexual photographs or video recordings, then invited victims to “web cam” or “live video chat” sessions.

“Unbeknownst to the victims, during the web cam/live video chats,” the DOJ said, the scammers would “surreptitiously” record the victims “as they exposed their genitals and/or engaged in sexual activity.” The scammers then threatened to publish the footage online or else share the footage with “the victims’ friends, family members, significant others, employers, and co-workers,” unless payments were sent, usually via Cash App or Apple Pay.

Much of these funds were allegedly transferred overseas to Kone’s accused co-conspirators, including 22-year-old Siaka Ouattara of the West African country the Ivory Coast. Ouattara was arrested by Ivorian authorities in February, the DOJ said.

“If convicted, Kone and Ouattara each face a maximum penalty of 20 years in prison for each conspiracy count and money laundering count, and a maximum penalty of 20 years in prison for each wire fraud count,” the DOJ said.

The FBI has said that it has been cracking down on sextortion after “a huge increase in the number of cases involving children and teens being threatened and coerced into sending explicit images online.” In 2024, the FBI announced a string of arrests, but none of the schemes so far have been as vast or far-reaching as the scheme that Kone allegedly helped operate.

In January, the FBI issued a warning about the “growing threat” to minors, warning parents that victims are “typically males between the ages of 14 to 17, but any child can become a victim.” Young victims are at risk of self-harm or suicide, the FBI said.

“From October 2021 to March 2023, the FBI and Homeland Security Investigations received over 13,000 reports of online financial sextortion of minors,” the FBI’s announcement said. “The sextortion involved at least 12,600 victims—primarily boys—and led to at least 20 suicides.”

For years, reports have shown that payment apps have been used in sextortion schemes with seemingly little intervention. When it comes to protecting minors, sextortion protections seem sparse, as neither Apple Pay nor Cash App appear to have any specific policies to combat the issue. However, both apps only allow minors over 13 to create accounts with authorized adult supervisors.

Apple and Cash App did not immediately respond to Ars’ request to comment.

Instagram, Snapchat add sextortion protections

Some social media platforms are responding to the spike in sextortion targeting minors.

Last year, Snapchat released a report finding that nearly two-thirds of more than 6,000 teens and young adults in six countries said that “they or their friends have been targeted in online ‘sextortion’ schemes” across many popular social media platforms. As a result of that report and prior research, Snapchat began allowing users to report sextortion specifically.

“Under the reporting menu for ‘Nudity or sexual content,’ a Snapchatter’s first option is to click, ‘They leaked/are threatening to leak my nudes,'” the report said.

Additionally, the DOJ’s announcement of Kone’s arrest came one day after Instagram confirmed that it was “testing new features to help protect young people from sextortion and intimate image abuse, and to make it more difficult for potential scammers and criminals to find and interact with teens.”

One feature will by default blur out sexual images shared over direct message, which Instagram said would protect minors from “scammers who may send nude images to trick people into sending their own images in return.” Instagram will also provide safety tips to anyone receiving a sexual image over DM, “encouraging them to report any threats to share their private images and reminding them that they can say no to anything that makes them feel uncomfortable.”

Perhaps more impactful, Instagram claimed that it was “developing technology to help identify where accounts may potentially be engaging in sextortion scams, based on a range of signals that could indicate sextortion behavior.” Having better signals helps Instagram to make it “harder for potential sextortion accounts to message or interact with people,” the platform said, by hiding those requests. Instagram also by default blocks adults from messaging users under 16 in some countries and under 18 in others.

Instagram said that other tech companies have also started “sharing more signals about sextortion accounts” through Lantern, a program that Meta helped to found with the Tech Coalition to prevent child sexual exploitation. Snapchat also participates in the cross-platform research.

According to the special agent in charge of the FBI’s Norfolk field office, Brian Dugan, “one of the best lines of defense to stopping a crime like this is to educate our most vulnerable on common warning signs, as well as empowering them to come forward if they are ever victimized.”

Both Instagram and Snapchat said they were also increasing sextortion resources available to educate young users.

“We know that sextortion is a risk teens and adults face across a range of platforms, and have developed tools and resources to help combat it,” Snap’s spokesperson told Ars. “We have extra safeguards for teens to protect against unwanted contact, and don’t offer public friend lists, which we know can be used to extort people. We also want to help young people learn the signs of this type of crime, and recently launched in-app resources to raise awareness of how to spot and report it.”

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