What you need to know
- The Consumer Financial Protection Bureau finalized a rule expanding its oversight over non-bank wallet apps hosted by big tech companies.
- Payment services and wallet apps from Apple, Google, Amazon, and others would fall under the CFPB's purview and potential scrutiny.
- The CFPB argues that once-small wallet apps have grown to become a "critical financial tool," which is why it's expanding its authority and will conduct "proactive examinations" of these companies.
The Consumer Financial Protection Bureau (CFPB) today shared a finalized rule that gives it expanded federal oversight over digital wallet apps and payment services, specifically those hosted by non-bank companies. The rule covers corporations handling more than 50 million transactions per year, which includes Apple, Google, and Amazon. Apple Wallet, Google Wallet, and Amazon Pay are just a few of the payment services that may now come under more scrutiny from the CFPB.
"Digital payments have gone from novelty to necessity and our oversight must reflect this reality," said Rohit Chopra, who is the director of the CFPB, in a press release. "The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures."
The CFPB argues that big tech companies offer services similar to banks and credit unions, the latter of which are subject to "supervisory examinations." However, tech conglomerates haven't been held to the same standards. The government agency claims it "always had enforcement authority over these companies," but explains that this new rule will give it the explicit authority to conduct proactive examinations of companies hosting large digital payment services.
These examinations will be to ensure tech companies like Apple, Google, and Amazon are following the law. Additionally, they will assess risk and aim to find potential problems before they create real problems. The CFPB wants to avoid "millions of consumers losing access to their funds," according to its press release.
The rule specifically targets large wallet apps and payment services, like Google Wallet, Apple Wallet, Amazon Pay, PayPal, Block, and Zelle. These kinds of services combined to account for more than 13 billion consumer payments annually. However, single-retailer payment services — such as the Starbucks app — are exempt.
According to CNBC, large banking companies supported the rule, wanting big tech companies to follow the same rules and protocols that they've followed for decades. CNBC also notes that the future of this rule could be in jeopardy if it doesn't align with the incoming Trump administration's goals and those of new CFPB leadership.
For now, the rule is pushing ahead, and will take effect 30 days after it's officially published in the Federal Register. That means users of digital wallet apps, like Google Wallet, will have a few extra layers of safeguards and consumer protection.
