The nation’s top consumer watchdog, the Consumer Financial Protection Bureau, has said it will extend its current bank supervisory authority to the large nonbank companies that provide the vast majority of digital wallets and peer-to-peer payment apps in the U.S. Due to uneven oversight at the federal level, such apps can leave consumers vulnerable to problems ranging from hidden fees to identity theft.
In its announcement Tuesday, the agency, known as the CFPB, said that Apple, PayPal, Venmo and others—collectively responsible for 88% of the U.S. market in digital payments—would be under scrutiny. The CFPB would not reveal the entire list of companies.
Payment Systems ‘Critical,’ Need ‘Appropriate Oversight’
According to the bureau, the fintech companies behind these apps handle more than $1 trillion per year via more than 13 billion payments, rivaling big banks in transaction size and reach. At present, CFPB examiners don’t have the authority to ensure that digital payment providers comply with consumer laws, such as privacy protections and bans on unfair or deceptive practices.
“Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks,” said CFPB director Rohit Chopra in a news release.
Chopra said that the proposed rule would subject large tech firms and other nonbank payments companies to “appropriate oversight.”
Apple and PayPal did not immediately reply to a request for comment.
The CFPB is taking public comments on the proposed rule, which can be submitted online at its page on regulations.gov, by email or by U.S. mail. The deadline for comments is December 29, 2023.
