Tech Organizations File Lawsuit Against US CFPB to Halt Regulation on Payment Apps and Digital Wallets – One America News Network
By Jonathan Stempel
January 16, 2025 – 7:46 AM PST
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(Reuters) – On Thursday, two tech trade associations filed a lawsuit against the U.S. Consumer Financial Protection Bureau (CFPB) in an effort to block a newly established rule that grants the agency supervisory power over payment applications and digital wallets operated by large, non-bank entities.
NetChoice and TechNet argued that Congress did not empower the CFPB to enforce strict and arbitrary regulations against major non-banking institutions that provide consumer financial services through platforms like Apple Wallet (AAPL.O), Google Pay (GOOGL.O), and Venmo.
The associations further asserted that the CFPB failed to demonstrate any consumer risks or lapses in regulatory oversight that would warrant such a rule, which affects companies handling at least 50 million transactions annually, totaling over 13 billion transactions.
In their legal filing in Washington, D.C., the complaint states, “The bureau did not adequately explain what consumer risks the rule was intended to address, instead rushing to identify a problem that may not even exist.”
The CFPB did not immediately respond to requests for comment regarding the lawsuit.
Upon announcing the final rule on November 21, the CFPB stated that it aims to provide consumers who use major tech firms for payment processing the same protections against fraud, privacy infringements, and account terminations that are standard for traditional banks.
Rohit Chopra, the director of the CFPB, indicated at that time that digital payments have transitioned from being a novelty to a necessity, necessitating appropriate regulatory oversight.
Chris Marchese, director of litigation for NetChoice, described the rule in a statement on Thursday as an “unlawful power grab” that could hinder innovation, diminish competition, and lead to increased costs.
Carl Holshouser, executive vice president of TechNet, added in a separate statement that the new regulations could also impose oversight on digital payment service providers regarding tax payments and other offerings that extend beyond the CFPB’s designated mission.
It remains uncertain if the Republican President-elect Donald Trump’s administration or the Republican-majority Congress will initiate changes or attempts to rescind the rule, especially with expectations of moves to limit the CFPB’s supervisory powers.
The case is designated as TechNet et al v CFPB et al, U.S. District Court, District of Columbia, No. 25-00118.
Reporting by Jonathan Stempel in New York; Editing by Mark Porter
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