This means that these companies will be subject to scrutiny from CFPB examiners, who will review their privacy protections, executives’ conduct, and adherence to regulations prohibiting unfair and deceptive practices.
If implemented, this proposal would encompass approximately 17 companies collectively handling over 13 billion payments annually. While GooglePay, ApplePay, PayPal, and CashApp are specifically mentioned, the CFPB has declined to disclose the identities of the other platforms that would fall under this regulatory umbrella.
In a recent speech, CFPB Director Rohit Chopra highlighted the agency’s findings regarding tech giants’ data collection practices. According to Chopra, these companies amass vast amounts of consumer payment data with minimal restrictions, insufficient transparency, and confusing corporate policies, potentially exposing consumers to the risk of “Chinese-style surveillance.”
The new proposal, applicable to companies processing more than five million transactions per year, aims to address these concerns by ensuring both traditional financial players and the tech sector are subject to equivalent oversight.
This approach is welcomed by consumer banks, with the Consumer Bankers Association commending the proposal as “a step in the right direction.” However, tech giants have expressed apprehension, arguing that the proposed regulations would stifle innovation and harm consumers.
Regarding a similar case in Australia last month, both Google and Apple have said that customers only use their phones to use cards issued by banks to make payments. This implies that the tech giants do not store or process payment data themselves, and any concerns about data collection should be directed towards the respective banks.
The proposal is currently subject to a notice-and-comment period expected to conclude in early 2024. Following this review period, the CFPB will assess the feedback received and determine whether to finalize the rule.
