On November 7, 2023, the Shopper Monetary Safety Bureau (“CFPB”) proposed a rule This might permit the CFPB to oversee sure giant non-bank firms that present client monetary providers similar to digital wallets and cost apps. If handed, it could topic giant know-how firms processing greater than 5 million cost transactions per yr, similar to Apple, Meta and Alphabet, to CFPB oversight evaluations for the primary time. Beneath the proposed rule, these giant nonbank firms could be required to stick to sure federal funds switch, privateness, and different federal client monetary safety legal guidelines, together with protections in opposition to unfair, misleading, and abusive practices.
The CFPB believes that imposing constant client safety legal guidelines amongst giant know-how firms and depository establishments will assist degree the enjoying subject, promote competitors, and defend customers’ privateness rights. The proposed rule goals to advertise competitors by requiring firms that provide transaction accounts, similar to checking accounts, bank cards and digital wallets, to present customers entry to their private monetary knowledge in order that they will share this knowledge extra simply with one other supplier. It could additionally prohibit firms that obtain such private knowledge from utilizing it for functions aside from monetary providers merchandise supplied to customers. Massive know-how firms would due to this fact not be allowed to make use of this private knowledge for focused promoting functions, promote it to brokers or maintain it indefinitely.
The proposed rule is a part of the CFPB’s efforts to supervise the shift to “open banking” in the USA and supervise giant know-how firms as they enter client monetary markets, blurring the normal line between banking and business actions. Earlier this yr, the CFPB launched a report claiming that enormous know-how firms have had a damaging impression on competitors and innovation within the cellular cost trade. As a part of this report, the CFPB requested info from these firms about their use of delicate private knowledge (accessible right here). The CFPB has indicated that it believes the present lack of regulatory oversight or oversight of enormous know-how and cost firms places customers in danger as a result of these firms aren’t topic to the identical client monetary safety legal guidelines as banks and credit score unions. Final yr, the CFPB additionally issued an interpretive ruling offering that know-how firms that market monetary merchandise utilizing behavioral concentrating on methods should adjust to federal client monetary safety legal guidelines. right here). In keeping with CFPB Director Rohit Chopra, “federal and state regulation enforcement can and will maintain these firms accountable in the event that they violate the regulation.”
Feedback on the proposed rule (accessible right here) should attain the CFPB no later than January 8, 2024.
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