The United States Consumer Financial Protection Bureau (CFPB) today proposed new oversight requirements for technology companies like Apple that offer digital wallets and payment apps.
According to the CFPB, payment services like Apple Pay are growing in popularity, but the companies behind them are not subject to the same "supervisory examinations" that banks undergo.
The newly proposed rule would require companies that handle more than five million transactions per year to adhere to the same rules as large banks, credit unions, and other financial institutions that are supervised by the CFPB.
The CFPB claims that there have been an increasing number of complaints about tech companies in the consumer finance market, and it argues that examiners should be able to carefully scrutinize the activities of tech companies to ensure they are following the law.
Big Tech and other companies operating in consumer finance markets blur the traditional lines that have separated banking and payments from commercial activities. The CFPB has found that this blurring can put consumers at risk, especially when the same traditional banking safeguards, like deposit insurance, may not apply.
Despite their impact on consumer finance, Big Tech and other nonbank companies operating in the payments sphere do not receive the same regulatory scrutiny and oversight as banks and credit unions. While the CFPB has enforcement authority over these companies, the CFPB has not previously had, inside many of these firms, examiners carefully scrutinizing their activities to ensure they are following the law and monitoring their executives.
The CFPB wants to be able to conduct examinations of tech companies to make sure that they are following funds transfer, privacy, and consumer protection laws, and adhering to the same rules that banks must follow. If finalized, the proposed rule would give the Consumer Finance Protection Bureau more oversight into the financial services provided by companies like Apple and Google.
