Concerns in Congress include the bureau’s justification for the rule, unclear guidance for service providers and the need for more public comments on the proposal.
02/12/2024 9:45 A.M.
1.5 minute read
Members of Congress are urging the Consumer Financial Protection Bureau to reopen comments on its digital payments rule for large nonbank companies in the marketplace and reconsider the rule as proposed.
U.S. Reps. Patrick McHenry, R-N.C., chair of the House Financial Services Committee, French Hill, R-Ark., and Mike Floods, R-Neb., sent a letter to CFPB Director Rohit Chopra on reconsidering the rule “given its insufficient justification, unclear guidance regarding third-party service providers, unknown effects on the digital asset ecosystem, and an inadequate comment period,” according to a news release.
The proposed rule would subject larger nonbank digital consumer payment companies to the CFPB’s authority to conduct examinations, helping to ensure consistent application of federal consumer financial laws across the marketplace.
The lawmakers state in the letter (PDF) to Chopra, that “as written, the proposed rule does not adequately justify the need to substantially expand the [b]ureau’s regulatory scope into the payments industry. Rather, the [b]ureau relies on its regulatory prerogative under the Dodd-Frank Wall Street Reform and Consumer Protection Act as the basis for implementing a burdensome and overreaching supervisory authority. The proposed rule fails to analyze the costs, the impact on competition, and inevitably how the proposal hurts consumers.”
Comments on the rule closed Jan. 8.
If finalized, this proposed rule will be part of the CFPB’s broader efforts to monitor the entry of large technology firms into consumer financial markets. Previous warnings and inquiries in 2022 and 2023 highlighted the importance of these companies adhering to federal consumer financial protection laws, especially when using sophisticated behavioral targeting techniques and handling sensitive personal data, ACA International previously reported.
The proposed rule, if implemented, would mark the sixth in a series of CFPB rulemakings defining larger participants in markets for consumer financial products and services. Previous rules covered participants in consumer reporting, debt collection, student loan servicing, international money transfers, and automobile financing.