The Consumer Financial Protection Bureau (CFPB) is seeking greater authority to supervise the activities of companies that offer services like digital wallets and payment apps on par with how the agency oversees large banks, credit unions, and other financial institutions.
The CFPB issued a notice of proposed rulemaking Tuesday that would “subject larger nonbank digital consumer payment companies to the CFPB’s authority to conduct examinations, helping to ensure consistent application of federal consumer financial laws across the marketplace,” the agency said in a press release. The proposal is specifically targeted at nonbank companies that handle more than 5 million consumer payment transactions per year and are not considered a small business by Small Business Administration standards.
In a speech last month, CFPB Director Rohit Chopra said the agency was looking at ways to conduct supervisory examinations of nonbanks operating consumer payment platforms. One method he mentioned was defining larger participants in the market and subjecting them to his agency’s scrutiny.
“As we seek to configure a payments architecture that can provide safe and secure electronic cash, we should make sure that the deployment of private-sector technologies and services are aligned with our values for fair competition, consumer protection, and our national interest,” he said.
The CFPB already has enforcement authority over nonbank companies operating in the payments sphere but typically has not had its examiners scrutinize their activities. The proposed rule, if adopted, would change that, allowing the agency to better ensure such companies have in place applicable protections against unfair, deceptive, and abusive acts and practices; rights of consumers transferring money; and privacy rights.
Comments are due Jan. 8 or 30 days after publication of the proposal in the Federal Register, whichever is later.