Republicans Push to Repeal Payment App Rule Benefiting Big Tech and Musk
By Amanda N. Jackson
Congressional Republicans are showing their Big Tech true colors. House Republicans are pushing to repeal a commonsense rule that requires payment apps like Cash App and PayPal to follow the same consumer protection rules as the payment apps the banks offer. It’s just another attack on the Consumer Financial Protection Bureau (CFPB) and its efforts to protect people from scammers, predatory lenders, Wall Street banks, and other financial predators.
Not too long ago, Republicans were up in arms about Big Tech monopolies eroding privacy, threatening children, and squelching free speech. But there’s a new sheriff Elon in town and now the Republicans are falling all over themselves to kowtow to Big Tech. Musk’s first mission is to repeal the Big Tech payment app rule not just for the companies but for Musk himself. His social media platform is rolling out X-Money, a payment app that would be subject to the payment app requirements. Repealing this rule directly enriches Musk. And Presto Change-o, Republicans are pro Big Tech.
Three-quarters of people regularly use payment apps like Apple Wallet, Google Pay, Venmo and more to make purchases or split dinner checks or transfer money to friends and family. Many low–income communities and communities of color rely on payment apps because they have been shut out of traditional banking due to access barriers and discrimination.
These apps seem easy and convenient, but there can be real downsides and problems that are hard to resolve. Payment apps are now the second most common source of payment fraud (after credit cards). The CFPB recently ordered Cash App to pay $175 million for allowing fraud to proliferate on its app. And, these apps’ business models often employ a range of deceptive and abusive practices, including the use of algorithms that reinforce discrimination, shoddy disclosures, hidden junk fees, and data practices that erode privacy. And the apps often give users the runaround when disputing fraudulent charges and surprise fees.
The CFPB payment app rule provides oversight to these payment apps the same as it does to those apps offered by banks. The CFPB had sued the payment app Zelle, a joint venture of Bank of America, JPMorgan Chase and Wells Fargo, for allowing fraud and identity theft to run rampant on the app costing people $870 million. (The Trump administration dropped the Zelle case last month, pardoning the banks for letting their customers get ripped off.) But despite the administration’s litigation capitulation, the payment app rule would supervise the Big Tech payment apps to safeguard people from fraud, deception, identity theft, and account freezes and deactivation.
Payments — and the consumer transaction data that can be harvested from payments — are a key strategy for Big Tech monopolists to expand their stranglehold over the economy. And the Musk-led pushback against the payment app rule shows how the Big Tech firms want to bend or break any rules that might apply to them, muddy the waters over when a tech firm is acting as a bank, or vice versa, and get customers used to paying a hidden price for convenience — their privacy, their security from fraud, or surprise junk fees.
The Musk driven scorched earth strategy against the payment app rule will permanently hide payment app misdeeds from regulatory oversight. That is a huge win for Big Tech — and especially for X-Money which Musk claims will generate $1.4 billion in revenue by 2028. Voting to overturn the CFPB payment app rule will literally enrich Elon Musk and reward him for unlawfully and unaccountably ransacking the federal government.
And we are the ones who get hurt. Repealing the payment app rule would leave users vulnerable to greater risks and less protection than people using banks or bank apps. This gives Big Tech a huge advantage and an indirect subsidy, since they can be less vigilant protecting their customers from cheats or fraudsters. Banks are no angels on this front, as the CFPB Zelle suit demonstrates, but giving Big Tech a get out of jail free card won’t solve that problem, it just leaves the three-quarters of us that use payment apps even more vulnerable with every transaction tap.
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