Jonathan Stempel here, bringing you the latest from the financial hub. Recently, two tech industry associations have taken legal action against the U.S. Consumer Financial Protection Bureau (CFPB). They’re aiming to halt a new directive that grants the bureau oversight over payment applications and digital wallets used by major non-banking entities.
The organizations in question, NetChoice and TechNet, argue that Congress never intended to give the CFPB unchecked power to regulate large non-banks that offer financial services through platforms like Apple Wallet, Google Pay, and Venmo.
These groups contend that the CFPB has not identified any consumer protection gaps or regulatory challenges that would warrant such a rule. The rule itself targets companies handling a massive volume of transactions—over 50 million annually, totaling more than 13 billion.
Their complaint, lodged in a Washington, D.C. federal court, criticizes the bureau for failing to justify the rule’s necessity. They claim it’s a classic case of a solution in search of a problem.
The CFPB, at the moment, hasn’t commented on the lawsuit.
When the final rule was announced on November 21, the CFPB noted its intention to extend the same fraud and privacy protections to consumers using large tech companies for payments as those offered by banks.
Rohit Chopra, the CFPB director, emphasized that digital payments have become essential and that regulatory oversight must evolve accordingly.
Chris Marchese, head of litigation for NetChoice, labeled the rule as an “unlawful power grab” that threatens to hamper innovation, limit competition, and potentially increase costs.
In a separate statement, Carl Holshouser, an executive vice president at TechNet, warned that the rule could also drag digital payment providers into areas like tax payment oversight, far exceeding the CFPB’s intended scope.
With a new administration on the horizon, led by the Republican President-elect Donald Trump, it’s uncertain whether there will be moves to alter or repeal the rule. The expectation is that efforts may be made to limit the CFPB’s regulatory reach.
This legal battle is formally recorded as TechNet et al v CFPB et al in the U.S. District Court for the District of Columbia, under case number 25-00118.
That’s the latest finance industry update from yours truly, Jonathan Stempel, here in New York with Mark Porter editing.
