Feedback submitted to the Consumer Financial Protection Bureau regarding the Larger Participant Rule
Ready to dive into the latest buzz surrounding the digital payment industry? Here's what's going down!
The Center has dropped some strong comments to the Consumer Financial Protection Bureau (CFPB), hollering about their proposed rule for supervising large non-bank digital payment application honchos. This proposed regulation aims to govern various consumer products such as peer-to-peer payment apps, stored-value wallets, pass-through wallets, neo-banks, cryptocurrency exchanges, and money transfer providers.
But here's the kicker - The Center thinks the proposed rule is way too broad and may squash innovation in the digital payments realm. So they suggested a few tweaks to make the rule fairer for everyone.
- Harm Assessment Time! The CFPB should dive deep and assess the consumer risks associated with each product type included in the proposed rule. They should also make those findings public for all to see.
- Revamp the "Large Participant" Definition! The current definition, which requires a $5 million transaction threshold, is like a big ol' net that snatches up almost every fish in the sea. The Center thinks the CFPB needs to provide a more solid justification for this threshold and consider a customized approach for different products and providers.
- Call Aunt Martha to Help! The CFPB should whip up a separate rule for each type of product mentioned in the proposed rule. Why? Because join-ing too many types of products with different consumer benefits together may lead to confusion, and nobody likes that. Historically, the CFPB has been known for tailoring rules to different markets and product providers.
- Retailer Carve-Out Revival! The CFPB should forget about the language that nixes the retailer carve-out for financial service data storage and usage in the Consumer Financial Protection Act. If this language stays, it could encourage retailers to steer clear of data usage to dodge CFPB supervision - and that might mean saying goodbye to cool stuff like anti-fraud technologies, personalized coupons, and targeted advertising.
Want the full scoop? Check out the comments yourself! This debate is shaping up to be an important one for the digital payments industry and consumers alike. Keep your eyes peeled for updates! 🤑💰💳💳💳
[1] From the enrichment data: The Center's main concern is that the CFPB's rule threatens constitutional balance and the limits of the administrative state by subjecting large nonbank digital payment and digital wallet companies to the same level of supervision as banks and credit unions without clear congressional authorization. They argue that the rule would impose onerous federal regulations that could slow innovation, raise costs, and limit the ability of these platforms to offer free or low-cost services, potentially harming consumers, especially the nearly 6 million Americans without traditional bank accounts.
[5] From the enrichment data: The Center suggests that the CFPB should restrict its supervisory authority strictly to what is explicitly authorized by Congress under the Dodd-Frank Act and limit its supervision only if nonbanks are designated as "larger participants" in specific markets with clear statutory backing to protect constitutional governance and preserve market innovation and consumer access to low-cost payment services.
- The Center is raising concerns about the proposed rule from the Consumer Financial Protection Bureau (CFPB), stating that it threatens constitutional balance and the limits of the administrative state.
- The Center argues that the rule, if imposed, could slow innovation, raise costs, and limit the ability of digital payment platforms to offer free or low-cost services, potentially harming consumers, especially those without traditional bank accounts.
- The Center recommends that the CFPB strictly restrict its supervisory authority to what is explicitly authorized by Congress under the Dodd-Frank Act and limit its supervision only if nonbanks are designated as "larger participants" in specific markets.
- The Center's suggestions aim to preserve market innovation and consumer access to low-cost payment services, which are essential for business growth and financial inclusion in the digital economy.
