Coin, a new credit-card like payment device, has received a fair amount of press coverage recently. If you haven't heard about Coin, which will debut in 2014, it is a new service that allows you to store payment information for up to eight credit-, debit-, and prepaid cards on a single card-like device. You can use the Coin service to lighten your wallet or purse by leaving at home all of your physical plastic cards. And, Coin has some nifty features that work with your smart phone. If you pre-order Coin now, it'll cost you either $50 or $100.
So, the next appropriate question: is Coin a good deal?
Many technophiles I know will pre-order Coin now and start using it when it becomes available next summer. They like to use the next new, shiny, mobile device or service. Nothing wrong with that. I prefer to look a little deeper first.
We've all experienced products, services, and social networking websites that promote convenience while the cost, or price we pay, has usually been our privacy and personal information. So, when a new financial payment device promotes convenience, I'm inclined to investigate first.
To answer this question, I first read the Coin Master Terms of Service (CMTOS) dated October 1, 2013; which you should, too. It helps you understand more about the service, what you get, and what your responsibilities are. After reading this document, I quickly learned that the Coin card includes software embedded on it:
"1. USE OF THE SERVICE. You are solely responsible for the use of the Service. By using the service you acknowledge that your use of the Service is solely at your own risk... Subject to the Terms, Coin grants you a limited, non-exclusive, non-transferable, revocable license to use any software that is provided by Coin that is pre-installed on, embedded in or incorporated into the Coin Card (“Embedded Software”)..."
Okay. That is good to know as a starting point. Section 9 of the CMTOS says that users aren't allowed to:
"... Access or use the Site for any comparative or competitive research purposes;"
Huh? Part of deciding whether or not to use any financial product or service is to research it and compare it against alternatives. This term struck me as most odd and curious. Maybe the lawyers at Coin rule.
With any new service or new product, i want to know exactly what I am getting for my money. That includes what happens when things go wrong. Nothing in life is is perfect. Good customer service includes help when things go wrong. Section 4 of the CMTOS:
"... If you have any reason to believe that your account information has been compromised or that your account has been accessed by a third party, you agree to immediately notify Coin by e-mail [email protected]. You are solely responsible for your own losses or losses incurred by Coin and others due to any unauthorized use of your account."
That seems pretty clear. And if your Coin card is lost or stolen:
"... you should immediately contact the customer service department of your credit card company and/or bank to suspend access to the financial accounts associated with your Coin Card. Additionally, you should use the App to disable your Coin Card until the Coin Card is recovered or replaced. If your Coin Card is lost, damaged or stolen you may purchase a replacement card..."
That seems pretty clear, too. I was hoping that the folks at Coin might help with notifying banks and card issuers of lost/stolen credit/debit/prepaid cards since they would already have all of my information for each debit/credit/prepaid card loaded on my Coin card. I guess not. If your account or Coin card are hacked and your money is stolen, then you are on your own to notify each card issuer, and to absorb any financial losses. Maybe your bank or financial institution will help and reimburse your for any stolen funds... or maybe they won't.
Perhaps most importantly, CNN Money reported that Coin doesn't have the approval of the credit card issuers and networks. That approval seems critical to me before ordering (or pre-ordering) Coin. It seems wise for consumers to check the terms of service or contract for any credit card to make sure a device like Coin isn't prohibited.
Sections 13 and 14 both seem to reinforce the you're-on-your-own theme:
"13. WARRANTY DISCLAIMER. THE SERVICE IS PROVIDED ON AN “AS IS” BASIS, WITHOUT WARRANTY OF ANY KIND."
If the Coin site, mobile app, or Coin card are hacked or contain malware, you still are on your own. In my opinion, any site that compiles financial payment information for users is a high-value target by hackers. Hackers go where the money and salable user information are.
So, not only are you on your own but you give up certain rights. See section 16 of the CMTOS:
"... In the interest of resolving disputes between you and Coin in the most expedient and cost effective manner, you and Coin agree that any and all disputes arising in connection with this Agreement shall be resolved by binding arbitration... Arbitration uses a neutral arbitrator instead of a judge or jury, may allow for more limited discovery than in court, and can be subject to very limited review by courts... You understand and agree that, by entering into these Terms, you and Coin are each waiving the right to a trial by jury or to participate in a class action... No Class Actions. YOU AND COIN AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further, unless both you and Coin agree otherwise, the arbitrator may not consolidate more than one person’s claims..."
Maybe these rights (e.g., to sue, to join with other consumers) aren't important to you, or maybe they are important. I mention this so you know what rights you may give up. And, Coin uses are liable for certain fees should you pursue arbitration. In my opinion, companies have introduced this into their policies to limit their financial exposure. To me, it is the loss of important rights for consumers. Since technology moves forward far faster than federal, state, and local laws, differences of opinion are likely... and hence, disputes.
Keep reading. There's more.
Next, I read the Coin Privacy Policy (also dated Oct. 1, 2013), because privacy policies often indicate what specific personal information is collected and shared. That sensitive, personal information the policy refers to as "Personally Identifiable Information" (PII). The policy doesn't list all data elements, but provides some examples:
"Examples of personal information include name, email address, mailing address, mobile phone number, and credit card or other billing information. Personal information also includes other information, such as date of birth, geographic area, or preferences, when any such information is linked to information that identifies a specific individual..."
Anytime I see the words "examples" and " such as" in this context, I assume that much more personal information will be collected. The Coin service collects personal information (PII) you directly provide and information you indirectly provide through your usage:
"... we may automatically record certain information from your device by using various types of technology, including “clear gifs” or “web beacons.” This "automatically collected" information may include your IP address or other device address or ID, web browser and/or device type, the web pages or sites that you visit just before or just after you use the Service, the pages or other content you view or otherwise interact with on the Service, and the dates and times that you visit, access, or use the Service. We also may use these technologies to collect information regarding your interaction with email messages, such as whether you opened, clicked on, or forwarded a message."
So, like most other social networking sites, you are the product and Coin will collect an extensive amount about both you and your activities through the Coin card, mobile app, and website.
When I read both policies I looked for language that stated whether or not Coin collects my purchase or transaction information (e.g., amount, store, location, items). That is where the value is. Banks know this and already collect consumers' purchase information. To me, it is reasonable to assume that Coin will collect this purchase information also.
The policy mentions third-party vendors, but doesn't state what information is shared with these vendors. So, information may be shared or not. It's hard to tell from the policy language. Just because the policy is silent about whther certain data is collected and/or shared, doesn't mean it won't. So, I assume some information is collected and shared to make it attractive for third-party vendors to participate. Perhaps, a future privacy policy version will be more precise.
Next, the privacy policy addressed data security:
"We cannot, however, ensure or warrant the security of any information you transmit to us or store on the Service, and you do so at your own risk. We also cannot guarantee that such information may not be accessed, disclosed, altered, or destroyed by breach of any of our physical, technical, or managerial safeguards."
Next, Coin has a security feature that CNN Money reported could also be problematic: it relies upon your smart phone being on and nearby. The security feature deactivates the Coin device if it is far from your smart phone (with the Coin app loaded). So, if your smart phone battery has died or your phone is broken, then your Coin card won't work. Nightmare scenario #1: you are at the phone store to buy a replacement battery for your dead smart phone, but you can't because the credit/debit credentials on your Coin card are locked. Only you know how often you fail to charge your smart phone and/or been stranded somewhere with a dead smart phone. Nightmare scenario #2: while you wait for your smart phone insurer to send a replacement smart phone for the one you lost/damaged/dropped, you can't use your Coin card.
last, Coin's convenience is limited. You can load an unlimited number of cards into your Coin account, but only up to eight (8) cards onto your coin device. So, a certain amount of shuffling is required for those who are heavy shoppers with lots of plastic in your wallet/purse.
So, is Coin a good deal? Only you can decide for yourself. Hopefully, I've highlighted some of the issues to consider. As a wise person once said: the devil is in the details.
Coin is not for me. I do not want to include yet another vendor in my purchases, as there are already many vendors involved in consumers' payment transactions -- all who want my purchase information for their own "big data" or data-mining purposes. Thanks to NSA surveillance, we've learned that metadata is extremely valuable, too. To me, convenience alone is not enough for a vendor to gain access to my purchase transactions.
Plus, the executives at Coin seem to have done, what appears to me to be, a masterful job at crafting online policies that effectively limit their liabilities, limit rights, and place a burden on Coin users that I find unacceptable.
If you have and use eight credit cards, one could argue you have bigger issues to address with credit. Me? My wallet is already light enough -- intentionally. I use only one credit card when shopping, avoid using prepaid cards (due to many fees and fewer consumer protections), and use my debit card only at my bank's ATM machines once weekly. Some membership cards have optional prepaid features, which I don't use for purchases because of the many fees on prepaid cards. Plus, the supermarket chain I shop at discontinued its loyalty-card program. So that card has already been destroyed. Plus, more retailers will replace their loyalty-card programs with newer, more comprehensive tracking technologies (e.g., smart shopping carts, video-camera-enabled mannequins, wristbands, WiFi hotspots, smart trash bins, etc.) in physical stores.
What's your view of the Coin service?
