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The Consumer Financial Protection Bureau (CFPB) in the United States is being sued for regulating digital wallets and payment applications similar to banks.  Technology trade groups TechNet and NetChoice filed a lawsuit on Jan. 16 to challenge the CFPB’s regulatory approach. The complaint is based on a rule published by the CFPB in December 2024. This rule expands the agency’s regulatory jurisdiction to ‘general-use digital consumer payment applications,’ targeting big companies including Apple Pay, Google Wallet, PayPal as well as digital wallet providers and non-bank financial service providers. TechNet, a partnership of technology professionals, and NetChoice, an organization campaigning for internet freedom, argue the CFPB’s action is excessive. They claim that the bureau aims to centralize authority over an innovative sector without showing proof of regulatory deficiencies that justify federal intervention. Industry expert challenges CFPB’s rule The CFPB’s rule allows the agency to conduct proactive investigations of payment applications to ensure they comply with federal privacy and fraud laws. The agency also claims that increased control will protect personal information, decrease fraud, and combat illegal banking, in which individuals are illegally denied access to financial services.  NetChoice’s head of litigation, Chris Marchese, criticized the rule, saying it undermines the rule of law, expands the administrative state, and threatens American consumers and creativity.  “The CFPB’s unlawful power grab undermines the rule of law, further bloats the administrative state, and puts American consumers and innovation at risk,” NetChoice’s director of litigation, Marchese, said. NetChoice Joins TechNet to Challenge Biden CFPB’s Power Grab Over Digital Payments CONTACT: PRESS@NETCHOICE.ORG WASHINGTON—Today, NetChoice joined @TechNetUpdate in a new lawsuit to protect consumers, businesses and innovation from the Consumer Financial Protection Bureau… pic.twitter.com/3OJMmXHbzA — NetChoice (@NetChoice) January 16, 2025 The plaintiffs also assert that payment applications are already subject to strict state rules and that federal oversight…

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Filed under: News - @ January 17, 2025 8:20 am