Digital payment apps continue to grow in popularity, but they don't abide by the same rules as large banks, credit unions, and other financial institutions. The Consumer Financial Protection Bureau (CFPB) is proposing to change that.
The proposed rule, if finalized, would mean about 17 of the largest payment app firms (including Apple Pay, Venmo, and Cash App) would have to follow consumer protection laws that apply to privacy rights, transferring money, and unfair, deceptive, and abusive acts and practices.
"Frauds and scams are going to be very high on our list of risks that we're looking for, said Shiva Nagaraj, Senior Counsel with the CFPB.
"So, this rule would subject the largest non-bank players in the payments market that provide mobile wallets and P2P apps to our examination process. And by examination, I mean that we are going to send CFPB examiners to these firms to make sure that they're following the laws they're subject to. And that means looking at their books and records, talking to their executives, and looking at real-life transactions with consumers to make sure that they're not violating the law, to make sure that they're keeping consumers' funds and data safe."
"Banks, as you know, are subject to very strong oversight from the federal government and the state government. But that's not true for these large tech firms," Nagaraj added.
"These 17 firms collectively, by our estimates, account for more than 10 billion consumer transactions a year. And in dollar volume, that's nearly $2 trillion. And those numbers are only going to go up over time."
Consumers can submit comments on the CFPB's proposed rule here.
The comments have to be received on or before January 8, 2024, or 30 days after the rule is published in the Federal Register, whichever is later.
"After we get the comments, we'll digest them, we'll carefully consider them, and we'll decide whether or not to finalize the rule. And if we do finalize, I would imagine it would happen sometime in 2024."