RSSThe Consumer Financial Protection Bureau recently finalized a rule to oversee the largest nonbanks offering payment wallet applications and digital funds transfers.
The rule is intended to help the CFPB ensure that companies handling more than 50 million transactions per year follow federal law like other financial institutions already do, according to the bureau. The most used apps covered by the rule process more than 13 billion consumer payment transactions annually. The rule would cover Amazon, Google and Apple; fintechs PayPal and Block; and peer-to-peer platforms Venmo and Zelle.
According to the CFPB, the rule will ensure large tech companies that collect large amounts of individual data abide by federal law, including by allowing consumers to opt out of certain data collection and sharing while banning misrepresentations about data protection practices.
The CFPB is also looking to ensure large payment companies look into consumer-disputed transactions that are either incorrect or fraudulent. Digital payments can be used to rip off older adults and active duty servicemembers, according to the bureau. Some often-used payment apps allegedly design their systems to shift disputes to other financial institutions and credit card companies instead of managing them on their own.
“Digital payments have gone from novelty to necessity and our oversight must reflect this reality,” said CFPB Director Rohit Chopra. “This rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.”
