The Consumer Financial Protection Bureau (CFPB) wants to expand its portfolio of compliance by targeting big tech and the Fintech services they provide. According to a statement issued by the CFPB today, the agency is targeting digital wallets and payment apps, claiming they must comply with the same rules as big banks and other financial services firms. If approved, new rules would garner greater scrutiny for firms like Google, Apple, Amazon, and more. These firms are already highly regulated and, in some cases, partner with established financial services firms to provide digital financial services.
CFPB Director Rohit Chopra said targeted activities used to be handled by supervised banks. Chopra said the proposed rules will “crackdown on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight.”
While claiming that tech firms have gained significant volume in payments, the CFPB failed to highlight any glaring problems or transgressions by these big tech firms and the services they provide.
The proposed rule is expected to subject larger non-bank digital consumer payment companies to the agency’s authority to conduct examinations. The CFPB claims this will level the playing field for banking incumbents.
Chairman of the House Financial Services Committee, Patrick McHenry, issued a statement on the CFPB’s attempt to broaden its regulatory empire.
“Digital payment applications are used by consumers every day. Congress and regulators must work toward a regulatory environment that embraces innovation in our payments system. The action announced by Director Chopra today is a step in the wrong direction. Consistent with the Bureau’s track record, this proposed rule will only entrench the status quo by impeding the adoption and development of innovative products and services. This, paired with Director Chopra’s recent actions, will only limit nonbanks’ ability to offer products and services consumers and small businesses rely on—eliminating choice and competition in our payments system. The CFPB is once again stretching its supervisory authority to the detriment of the consumers the agency was created to protect.”
Comments must be received on or before January 8, 2024, or 30 days after publication of the proposed rule in the Federal Register, whichever is later.