Lawmakers seek to scrap CFPB big tech payments oversight

A pair of resolutions pending in the U.S. House and Senate would put a stop to the Consumer Financial Protection Bureau's oversight of digital payment apps. Congressional resolutions are not the same as legislation, they simply express the sentiments of lawmakers. However, they can become law if passed by both the House and Senate and signed by the President.

On Nov. 21, 2024, the CFPB approved a rule that would put big tech companies offering digital payments on a regulatory par with big banks and other financial services firms that were already subject to CFPB oversight. In announcing the new rule, the consumer watchdog agency estimated that the most widely used apps covered by the rule collectively process over 13 billion consumer payment transactions annually.

Digital payment apps that would be covered by the rule include Apple Pay, Google Pay, PayPal and Square. But other apps could be added – apps like X Payments, a payment app that is in the works at the social media platform X. In January, X announced a deal with Visa that would allow X users to move funds between their traditional bank accounts and their X digital wallets to make P2P payments in real time. No start date has been announced yet for X Payments, however.

"What began as a convenient alternative to cash has evolved into a critical financial tool, processing over a trillion dollars in payments between consumers and their friends, families and businesses," the agency said in a statement announcing adoption of the rule.

The rule, which was hotly contested by big tech companies, took effect on Jan. 9, 2025. A pair of tech groups – NetChoice and TechNet – sued the CFPB and its director, Rohit Chopra, in U.S. District Court for the District of Columbia, asserting that the bureau overstepped its authority in adopting the rule. The two groups represent some of the biggest technology companies on the plant, including Amazon, Apple, PayPal and Google,

At about the same time the lawsuit was being filed, President Trump took office and fired Chopra. Russell Vought, who is also director of the Office of Management and Budget, is now acting director of the CFPB.

Resolution would 86 rule

Now Republicans in Congress want to 86 the rule. Senator Pete Ricketts, R-Neb., introduced a resolution that is awaiting a vote by the full Senate; would put a stop to what he described in a press release as CFPB "overreach." A similar resolution is pending in the U.S. House, where it was introduced by Representative Mike Flood, D-Neb.

"Following their election loss, the Biden-Harris CFPB rushed an eleventh-hour rule to attack the non-bank digital consumer payment applications," Sen. Flood said in introducing the resolution. "This one-size-fits all solution in search of a problem unnecessarily expands the CFPB's authority." Ricketts urged the Senate to pass the resolution "without delay."

"Over the last four years, progressive activists sought to dramatically expand the regulatory authority of the Consumer Financial Protection Bureau," Rep. Flood said in a statement. "Rolling back this regulation is critical to ensuring that the CFPB doesn't become a barrier to innovation for job creators across America."

Vying constituencies

Both TechNet and the Financial Technology Association voiced approval for the pending resolutions.

"This was an overreach by the CFPB as payment companies are well-regulated at the state and federal levels," Penny Lee, president and CEO of the Financial Technology Association, said in a statement.

The CFPB's rule "does not identify any specific consumer harm," asserted Carl Holshouser, executive vice present at TechNet.

Chuck Bell, programs director at Consumer Reports, disagreed. In a letter to the Senate he insisted that consumer demand exists for the rule, and he urged lawmakers not to pass the resolution.

"As the market for consumer payment applications grows, concerns about large losses related to hacking and induced fraud on Big Tech payment platforms have mounted," Bell asserted. "In 2023 alone, consumers reported losing $210 million related to [person-to-person] payment apps." The median loss to consumers scammed by fraudsters using payment apps is $500, he said.

Bell added that Consumer Reports has collected 25,000 consumer signatures on a petition urging the CFPB to "aggressively investigate reports of fraud" on P2P apps and requiring fraudsters to pony up the money they scammed consumers out of.

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