FOR IMMEDIATE RELEASE

Nov. 20, 2024

CONTACT:
Carter Dougherty, carter@ourfinancialsecurity.org

CFPB Proposal Provides Consistent Oversight and Supervision for Nonbank Firms
Larger Participant Measure Levels the Playing Field for Banks, Credit Unions, and Nonbanks

Earlier today, the Consumer Financial Protection Bureau (CFPB) finalized a proposal that brings much needed oversight and supervision to large providers of digital wallets and payment apps, also known as peer-to-peer or  P2P apps. Nonbank financial service companies that facilitate at least 50 million consumer payment transactions per year would be subject to supervision and oversight by the CFPB, bringing consistency to the way consumer payment services are regulated and much needed oversight to a sector that can subject consumers to financial harms. 

Previously, the CFPB did not supervise and oversee nonbank fintech service providers in the same way it regulated banks and credit unions for their payment apps, leaving consumers exposed to unfair, deceptive and abusive practices. The improved supervision may also encourage larger nonbank fintechs to take payment fraud more seriously and encourage stricter compliance with important consumer protection measures, such as the Electronic Funds Transfer Act (EFTA), and data privacy laws. 

“It’s becoming much more common for people to use a digital wallet or payment app to make purchases with their phone, but consumers don’t realize these purchases are not protected in the same manner as traditional payment services are,” said Christine Chen Zinner, senior policy counsel at the Americans for Financial Reform Education Fund. “This supervisory rule will enable the CFPB to make sure that big digital payment apps like Google Pay or Apple Pay are playing fair and not shortchanging or exploiting their customers or putting their data and funds at greater risk.” 

“While we applaud the finalization of the rule, there’s still more to do to ensure consumers, particularly those from marginalized populations, are adequately protected from potential abusive and unfair practices by fintech companies looking to get make quick money on payments without establishing safeguards for their customers,” said Mark Hays,  Associate Director at the Americans for Financial Reform Education Fund. “The CFPB and other regulators must be vigilant in their oversight of the fast evolving digital payments landscape. Whether it’s crypto payment platforms, pre-paid cards, or other new payment methods, the explosion of ventures in this part of the financial sector means there will always be emerging actors seeking to profit at the expense of their customers,” said Hays.

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