On November 7, 2023, the Consumer Financial Protection Bureau (CFPB) announced a proposal to subject certain large digital consumer payment companies to the CFPB’s authority to conduct examinations. If finalized, the rule would be the fifth time the CFPB has invoked its authority under the Dodd-Frank Act over so-called “larger participants” of a market in consumer financial products and services. From 2012 to 2015, the CFPB issued rules covering consumer reporting, consumer debt collection, student loan servicing, international money transfers, and automobile financing.
Under the proposal, the CFPB would define a market for general-use digital consumer payment applications. The proposed market would cover providers of funds transfer and wallet functionalities through digital applications for consumers’ general use in making payments to other persons for personal, family, or household purposes. Larger participants of this market—specifically those companies handling more than 5 million consumer payment transactions per year—would be subject to the same supervisory examinations the CFPB conducts on banks under Title X of the Dodd-Frank Act.
Comments on the proposal are due January 8, 2024, or 30 days after publication of the proposed rule in the Federal Register, whichever is later.
"Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks. Today's rule would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight." --CFPB Director Rohit Chopra
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