U.S. consumer regulators focus on oversight of big tech digital wallets, Investing.com reports

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The Consumer Financial Protection Bureau (CFPB), the top consumer finance regulator in the United States, has proposed regulating digital payment and smartphone wallet services provided by giants. The CFPB claims these services compete with traditional payment methods but lack necessary consumer protections.

The proposal would put companies like Alphabet (NASDAQ: GOOGL), Apple (NASDAQ: NASDAQ: ), PayPal (NASDAQ: NASDAQ: ) and Block’s CashApp under similar banks. supervision. CFPB examiners will examine the companies’ privacy protections, operational practices and compliance with laws prohibiting unfair and deceptive practices.

A CFPB official said the proposal, if finalized, would include about 17 companies that would collectively process more than 13 billion payments annually. The agency did not disclose the names of other platforms besides GooglePay, ApplePay, PayPal and CashApp.

The proposal is a long-awaited and ambitious move by CFPB Director Rohit Chopra to wield the agency’s full authority over big tech companies, an industry he has frequently criticized over privacy and competition concerns. Since becoming a director in 2021, Chopra has gradually increased the CFPB’s scrutiny of the industry, requesting information in 2021 on how big tech companies use consumer data and launching an investigation into its payments platforms last year.

In a statement on Tuesday, Chopra noted that the tech industry has expanded into traditional financial services provided by the heavily regulated banking industry. “Today’s rules will ensure that large technology companies and other non-bank payments companies are subject to appropriate oversight, thereby curbing one avenue for regulatory arbitrage,” he said.

Chopra revealed in a speech last month that CFPB research found that tech giants collected vast amounts of consumer payment data with few restrictions, limited transparency and confusing company policies. This puts consumers at risk of being spied on by companies, similar to practices in China.

Senior CFPB officials discussing the proposal on Tuesday stressed the need to closely scrutinize the privacy compliance of these large companies with vast amounts of consumer data. Many of these companies’ business models revolve around monetizing this data.

Representatives from big tech companies have previously highlighted their efforts to protect consumer data.

The proposed rules would apply to companies that process more than 5 million transactions annually. The CFPB believes the rule will also promote competition by ensuring that traditional financial players and the technology industry are subject to the same regulations.

The proposal is currently open for notification and consultation, which is expected to close in early 2024.

Reuters contributed to this article.

This article was created and translated with the help of artificial intelligence and reviewed by an editor. For more information, please see our terms and conditions.

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