CFPB proposes regulation of digital payments

Consumer Financial Protection Bureau (CFPB) has proposed new regulations for tech giants operating in the digital payments space.

The proposed rule would subject companies like Google, Apple, PayPal, and Block’s CashApp to bank-like supervision, ensuring that they adhere to the same standards as traditional financial institutions.

The CFPB’s proposal comes amid growing concerns over the collection and use of consumer data by tech companies. The agency found that these firms gather vast amounts of payments data with minimal transparency and often confusing privacy policies, putting consumers at risk of surveillance.

Under the proposed rule, companies handling more than five million transactions annually would face scrutiny from CFPB examiners who would assess their privacy protections, executives’ conduct, and compliance with consumer protection laws. This oversight would help ensure that consumers are treated fairly and that their personal information is safeguarded.

The CFPB’s proposal has been met with mixed reactions. While consumer advocacy groups have praised the move, representatives of tech companies have expressed concerns about the potential impact on innovation. However, the agency has emphasized that the rule is not intended to stifle competition but rather to create a level playing field between traditional financial institutions and tech giants.

The proposed rule is now subject to a public comment period and is expected to be finalized in early 2024.

The sources for this piece include an article in Reuters.

IT World Canada Staff
IT World Canada Staff
The online resource for Canadian Information Technology professionals.

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