Meta Platforms Inc., Apple Inc., Alphabet Inc., and other businesses that provide digital wallets and payment apps would be subject to US Consumer Financial Protection Bureau monitoring under a fresh proposed rule intended to treat nonbanks more like traditional rivals.
According to a statement released by the CFPB on Tuesday, businesses that process more than 5 million transactions annually will be subject to regulations similar to those already in place for banks, credit unions, and other financial institutions within its purview.
If the rule is approved, CFPB examiners will have the ability to keep an eye out for unfair, misleading, or abusive behavior in addition to complying with federal money-transfer regulations when it comes to payment apps. Though present regulations prevent the agency from routinely monitoring nonbanks’ operations, it can already intervene if they commit illegal acts.
Director of the CFPB, Rohit Chopra, said in the statement that “today’s rule would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subject to appropriate oversight.”
According to CFPB estimates, the proposed rule would include 17 corporations or 88% of all digital payments made annually. According to the agency’s predictions, these companies handled almost 13 billion transactions in 2021, amounting to $1.7 trillion in payments.
According to a regulatory document made by PayPal on November 2, the CFPB has already begun looking into Venmo’s error-resolution procedures. According to the corporation, it is assisting with the inquiry.