As CFPB goes, so goes Big Tech payments oversight

The Trump Administration shuttered the Consumer Financial Protection Bureau, which means, among other things, that Big Tech payment schemes likely will not be held to the same regulatory standards as financial institutions offering payment services.

That has Senator Elizabeth Warren, the chief architect of the CFPB, hopping mad. The Massachusetts senator, the ranking Democrat on the Senate Committee on Banking, Housing and Urban Affairs, joined a protest at the CFPB's now shuttered headquarters, and blasted the move.

"The CFPB is the cop on the beat, and that cop is the one that caught the crooks and, so far, has made them give back [to scammed consumers] $21 billion," she told those who'd gathered for the event. "Donald Trump ran his campaign on lowering costs for working families," Sen. Warren told the crowd. Now, she added, he wants "to shut down the agency that has delivered $21 billion to hardworking families."

For now, the bureau has been instructed to stop all rulemaking, litigation and other activities. That would seem to mean the lawsuit filed by NetChoice and TechNet last month alleging the consumer watchdog agency had overstepped its authority by adopting the rule is no longer pending.

X Money

Sen. Warren characterized the move to shutter the CFPB as an attempt by Elon Musk to avoid oversight for X Money, the latest entrant into the world of Big Tech payment apps. The CFPB's final rule on federal oversight of popular digital payment apps was finalized on Nov. 21, 2024. It grants the CFPB the authority to conduct proactive examinations of large nonbank companies offering digital funds transfer and payment wallet apps, ensuring their compliance with federal consumer financial laws.

The CFPB estimated that the most widely used apps covered by the rule collectively process over 13 billion consumer payment transactions annually. CFPB oversight was to apply to companies that process at least 50 billion in U.S. dollar transactions a year.

Warren told the crowd gathered at CFPB headquarters in Washington that the move was an attempted end run around X Money being subject to CFPB oversight.

Late last month, X announced its first big partnership aimed to get X Money off the ground: Visa. The plan is for X Money account users to fund and transfer money in real time with their Visa-branded debit cards and instantly transfer money to their bank accounts.

An exact date for the U.S. launch of X Money has yet to be announced. But X has been working on obtaining money transmitter licenses, on a state-by-state basis, which would be necessary to become a full-functioning person-to-person payment service. At last count it had obtained licenses from 40 states.

Money transmitter licenses are issued on the state level. Money transmitter businesses, however, must abide by certain federal laws such as the Bank Secrecy Act, and consumer disclosure requirements.

Who has the authority to shut down CFPB

The CFPB was created by the Dodd-Frank Act in the aftermath of the 2008 financial crisis. "Congress created the CFPB to protect people from getting swindled," Warren told the crowd. "The CFPB is there to make sure that [X Money] can't scam you our steal your sensitive personal data."

That's why Elon Musk (X's owner and President Trump's trusted adviser) wants to "kill" the agency, she added.

But Warren insisted the Trump Administration lacks the power to shutter the consumer watchdog agency. "Congress built it and no one other than Congress [can shutter it]," she said. "We will fight it out in Congress. We will fight it out in the courts. We will fight it out all across the country – and I promise you we will win."

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