Digital wallets could face same regulation as banks

By: Susan Tompor
Detroit Free Press
USA Today Network

DETROIT - Popular digital wallets and payment apps run by giants like apple and Google are being targeted for more regulatory oversight to protect consumers.
..... The Consumer Financial Protection Bureau said it wants to supervise the largest payment platforms that are not run by traditional banks to make sure these digital wallets and payment apps follow applicable federal consumer financial protection laws.
..... The digital wallet industry has built up a significant footprint where $1.7 trillion in consumer payments are made each year - and experts say it's likely to grow significantly in the years ahead. We're talking about 13 billion transactions a year.

Proposed regulation would be imposed on 17 biggest players

..... The goal is to make sure that consumers are covered under rules that apply to "unfair, deceptive and abusive acts and practices, rights of consumers transferring money, and privacy rights."
..... The big digital wallets that make it easy to spend money or transfer cash to others would have to play by the same rules as banks and credit unions.
..... The proposed regulation would cover 17 companies with the bulk of the market share, according to a CFPB official on a call Tuesday [11/21/2023] with the media. the proposed changes would apply to household names like Apple Pay, Google Pay, Venmo and CashApp. the CFPB did not give a list of the 17 companies
..... Under the proposed change, the CFPB would be conducting off-site supervisory exams and in-person ones at the offices run by these Big Tech platforms. It would be similar to how the CFPB regulates banks.

New rule would be part of a larger watchdog effort

..... The CFPB said the proposed rule of finalized, would be one part of the consumer watchdog agency's effort to monitor the entry of large technology firms into consumer financial markets. The agency sees a need to look into data privacy issues, among other factors.
..... Comments about the rule change must be received on or before January 8, 2024, or 30 days after publication of the proposed rule in the Federal Register, whichever is later.
..... Consumers can submit complaints about financial products or services by visiting the CFPS's website at www.consumerfinace.gov or by calling 855-411-2372.
..... Several trends are colliding: the erosion of traditional lines between core banking activities and commercial financial activities, the growth of e-commerce, and the ease of digital surveillance," according to comments made in October [2023] by Rohit Chopra, director of the CFPB.
..... Chopra noted then that firms collect a significant amount of data about the consumer using their payment platforms. The data is then used to develop, market and sell payment products, as well as other products and services to potential third parties.
..... Big Tech engage in bank-like activities, either o their own or through complex arrangements with banks, without facing many of the same limitations and obligations."

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