NetChoice And TechNet Sue CFPB In US Court To Block Rule On Payment Apps, Digital Wallets
NetChoice And TechNet Sue CFPB In US Court To Block Rule On Payment Apps, Digital Wallets
Complain that it stifles innovation and competition
Technology trade groups, NetChoice and TechNet have sued the Consumer Financial Protection Bureau (CFPB) in the US District Court for the District of Columbia, to block a rule granting supervisory authority over large non-bank payment apps and digital wallets.
They argued that the rule was excessive and unjustified and may stifle innovation and competition. The trade groups added that Congress did not give freedom to the CFPB to aggressively, arbitrarily and capriciously police large non-banks offering consumer financial services through products such as Apple Wallet, Google Pay and Venmo.
They complained that the Bureau did not identify consumer risks or gaps in regulatory oversight that justified the rule, which covers companies that process at least 50 million transactions annually and more than 13 billion overall.
The complaint read, "The bureau failed to show what consumer risks.”
In November last, the CFPB said it would give consumers using big technology companies to process payments, the same protections against fraud, privacy violations and account closures that they received at banks.
CFPB director Rohit Chopra had said that digital payments "have gone from novelty to necessity and our oversight must reflect this reality."
Chris Marchese, director of litigation at NetChoice termed the rule an "unlawful power grab" that could stifle innovation, reduce competition and raise prices.
Carl Holshouser, a TechNet executive vice president, stated that the rule could subject digital payment service providers to oversight of tax payments and other products that go beyond the CFPB's mission.
Meanwhile, it is unclear whether Republican President-elect Donald Trump’s administration or the Republican-controlled Congress might try to change or eliminate the rule. It is expected that they could reduce the CFPB’s supervisory measures.
