Washington, DC – The Consumer Federation of America has released this statement in response to the proposal announced today by the CFPB to Provide “New Federal Oversight of Big Tech Companies and Other Providers of Digital Wallets and Payment Apps.”
Under the proposal, the CFPB will supervise larger payment app and digital wallet providers for compliance with rules for the electronic transfer of funds, privacy provisions in the Gramm-Leach-Bliley Act, and against unfair, deceptive, or abusive acts and practices. All of these steps will advance the interests of consumers by holding Big Tech accountable to the same rules that apply to other payments providers.
The proposal will close loopholes in consumer financial protection law:
“Today’s announcement marks a significant step toward protecting consumers in an economy where consumers increasingly rely on non-bank Big Tech firms to transfer their money,” said Adam Rust, Director of Financial Services at the Consumer Federation of America. “The proposal will close a loophole that has permitted these firms to benefit from regulatory inconsistencies and represents another way that the CFPB is moving to protect consumers from Big Tech.”
The proposed rule will support competition between Big Tech, other businesses, and depositories that facilitate payments:
“We should be concerned whenever the line between commerce and banking is permitted to blur. When a large firm engages in both, it undermines competition, destabilizes the economy, and poses risks to consumers. For these reasons and others, requiring separation between the two has been a fundamental principle of banking regulation in the United States. Big Tech payment apps and digital wallets have been able to operate outside of these boundaries. By closing this loophole, the CFPB is moving forward to hold Big Tech accountable to play by the same rules as everyone else.
“Big Tech has built payment apps and digital wallets to gain an unfair advantage over competitors that do not have the size and resources to integrate payment technology into their businesses. The CFPB’s proposal will restore an imbalance in the marketplace between Big Tech and Main Street businesses. Relatedly, the proposal fosters changes to support regulatory parity between Big Tech and insured depositories, ensuring that all entities facilitating payments comply with consumer financial protection laws.
The proposed rule will protect consumer privacy:
“Today’s announcement heralds more protection for consumer privacy. We should be concerned whenever a company has information about your finances and shopping behavior. Big Tech has used the information it can glean from its payment services to target consumers for financial products. We applaud the Bureau for this proposal and the others it has taken to address the encroachment of Big Tech on consumer privacy.