On November 21, 2024, the CFPB finalized a rule to supervise the largest nonbank companies offering digital funds transfer and payment wallet apps. The rule will help the CFPB to ensure that these companies follow federal law just like large banks, credit unions, and other financial institutions already supervised by the CFPB.
Digital payment apps are now a key part of daily shopping. They compete with credit and debit cards for both online and in-store purchases. While banks and credit unions offering consumer payment services are subject to CFPB supervisory examinations, many of these very large technology firms handling billions of transactions are not. The CFPB’s final rule will specifically apply to companies handling more than 50 million transactions per year.
The CFPB’s final rule will enable the Bureau to supervise companies in key areas including:
Privacy and Surveillance. Large tech companies collect extensive data on individuals' transactions. Federal law permits consumers to opt-out of specific data collection and sharing, while also prohibiting misleading claims about data protection.
Errors and Fraud. Consumers have the right to dispute incorrect or fraudulent transactions, and financial institutions must investigate them. The CFPB is concerned about the potential for digital payment apps to defraud older adults and active duty servicemembers. Some popular apps seem to shift dispute responsibility to banks and credit unions instead of handling them directly.
Debanking. Consumers can face serious issues when they lose access to popular payment apps or experience disruptions in their ability to make or receive payments. Reports to the CFPB indicate that such closures or freezes can significantly impact their lives.
Read the CFPB’s press release here.
The final rule can be found here.