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CFPB Proposes New Federal Oversight of Big Tech Companies and Other Providers of Digital Wallets and Payment Apps
WASHINGTON DC – The Consumer Financial Protection Bureau (CFPB) proposes to supervise large non-bank companies that offer services such as digital wallets and payment applications. Driven largely by Big Tech and other large technology companies, digital payment applications and wallets continue to grow in popularity, but many of the companies are not subject to CFPB supervisory examinations. Today’s proposed rule would ensure that these non-bank financial companies – specifically large companies that manage more than 5 million transactions per year – adhere to the same rules as large banks, credit unions and other financial institutions already supervised by the CFPB.
“Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks,” said CFPB Director Rohit Chopra. “Today’s rule would stifle an avenue of regulatory arbitrage, ensuring that large technology companies and other nonbank payments companies are subject to appropriate oversight.”
Digital applications now help millions of people send money to friends and family, as well as help them carry out a variety of retail-to-consumer payment transactions. These digital applications have a share of e-commerce payment volume similar to or greater than traditional payment methods such as credit cards and debit cards. Such applications also gained a significant volume of in-person retail spending. Amid increasing merchant acceptance of general consumer digital payment applications, low- and middle-income consumers use consumer digital payment applications for a portion of their total retail spending that rivals or exceeds their use of cash. However, complaints about these applications and the companies that manage them have increased in recent years.
Big tech companies and other companies operating in consumer finance markets are blurring the traditional lines that separated banking and payments from commercial activities. The CFPB concluded that this uncertainty could put consumers at risk, especially when the same traditional banking safeguards, such as deposit insurance, may not apply. Despite their impact on consumer finance, Big Tech and other non-bank companies operating in the payments sphere do not receive the same scrutiny and regulatory oversight as banks and credit unions. Although the CFPB has enforcement authority over these companies, the CFPB previously did not have examiners at many of these companies who carefully examined their activities to ensure they were complying with the law and monitoring their executives.
The proposed rule would subject the largest non-bank consumer digital payments companies to the CFPB’s authority to conduct examinations, helping to ensure consistent application of federal consumer financial laws across the market. Specifically, the proposed rule would help ensure that these large non-bank companies:
- Comply with applicable funds transfer, privacy, and other consumer protection laws: The CFPB would be able to oversee larger participants for compliance with applicable federal consumer financial protection laws, which include applicable protections against unfair, deceptive, and abusive acts and practices, rights of consumers transferring money, and privacy rights.
- Follow the same rules as banks and credit unions: Supervision of these large companies by the CFPB can promote a level playing field with depository institutions. Greater oversight of non-banks in this market would ensure that federal consumer financial protection law is applied consistently across non-deposit institutions and depository institutions in order to promote fair competition.
Today’s proposed rule, if finalized, would be one part of the CFPB’s efforts to carefully monitor the entry of large technology companies, including Big Tech giants, into consumer financial markets. In 2021, the CFPB warned big technology companies that they must adhere to federal consumer financial protection laws when using sophisticated behavioral segmentation techniques commercialize financial products and launched a public inquiry for more information on the risks posed by Big Tech payments platforms, along with potential policy solutions. In 2023, the CFPB followed up with a 2021 Solicitation to big technology companies for information about their payment system plans with more detailed orders for more information about the use of sensitive personal data, and highlighted the role of certain big technology companies in limiting competition and innovation in mobile payments.
In addition to these actions, the CFPB opened the Competition and Innovation Office to ensure that start-ups can compete with big tech companies in consumer finance, and established a supervisory technology program features technology experts and examiners focused on, among other things, the risks associated with Big Tech consumer financial products.
The Consumer Financial Protection Act gives the CFPB the authority to conduct supervisory examinations on all nonbank companies in the mortgage, payday loan, and private student loan industries, as well as those that serve as service providers to banks and credit unions. . Additionally, the CFPB may oversee individual entities that pose a risk to consumers as well as larger players in other markets.
The proposed rule would be the sixth in a series of CFPB rules to define the largest participants operating in markets for consumer financial products and services that play a substantial role in consumers’ everyday lives. The first five rules covered larger participants in consumer reports, consumer debt collection, student loan service, international money transfersIt is car financing.
Read today’s Notice of Proposed Rulemaking.
Comments must be received by January 8, 2024, or 30 days after the proposed rule is published on Federal Registerwhatever happens next.
Read Director Chopra’s October 2023 remarks on digital payments.
Consumers can lodge complaints about financial products or services by visiting the CFPB website or by calling (855) 411-CFPB (2372).
Employees who believe their company has violated federal consumer financial protection laws are encouraged to submit information about what they know to whistleblower@cfpb.gov.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer financial laws and ensures that markets for consumer financial products are fair, transparent and competitive. For more information visit www.consumerfinance.gov.
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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