Regulatory Showdown: Tech Giants Take on CFPB Over Payment App Oversight
The U.S. Consumer Financial Protection Bureau (CFPB) is facing a legal challenge from two prominent technology trade groups, NetChoice and TechNet, over a new rule granting the agency supervisory authority over payment apps and digital wallets from large non-banks.
A Question of Authority
At the heart of the dispute is whether Congress gave the CFPB the power to police large non-banks offering consumer financial services through products like Apple Wallet, Google Pay, and Venmo. The trade groups argue that the CFPB has overstepped its bounds, citing a lack of evidence to justify the rule.
The Rule in Question
The CFPB’s rule, announced on November 21, covers companies that process at least 50 million transactions annually, totaling over 13 billion overall. However, the trade groups claim that the agency failed to identify any consumer risks or gaps in regulatory oversight that would warrant such a move.
A Threat to Innovation?
Critics of the rule argue that it could stifle innovation, reduce competition, and drive up prices. NetChoice director of litigation Chris Marchese called the rule an “unlawful power grab,” while TechNet executive vice president Carl Holshouser warned that it could lead to oversight of tax payments and other products beyond the CFPB’s mission.
Uncertainty Ahead
The lawsuit, filed in Washington, D.C. federal court, raises questions about the future of the rule under the incoming administration of President-elect Donald Trump. With Republicans set to take control of Congress, there is speculation that they may try to reduce the CFPB’s supervisory authority.
The Battle Lines Are Drawn
The case, TechNet et al v CFPB et al, U.S. District Court, District of Columbia, No. 25-00118, promises to be a closely watched showdown between the tech industry and regulators. As the CFPB seeks to expand its oversight, the trade groups are pushing back, arguing that the agency’s actions are arbitrary and unjustified.
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