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The U.S. Senate has voted to overturn a Consumer Financial Protection Bureau (CFPB) rule that would have extended regulatory oversight to major Big Tech payment services, including Apple Pay, Google Pay, PayPal, and X (formerly Twitter).
Senate Moves to Block CFPB’s Digital Payments Oversight
The decision, driven by party-line voting, backs a Congressional Review Act resolution introduced by Republican senators Pete Ricketts and Mike Flood. The resolution still requires approval in the House of Representatives before taking full effect.
The CFPB rule, finalized in late 2023, aimed to ensure that nonbank financial players adhere to the same federal laws as banks, credit unions, and other regulated financial institutions. Given the growing market share of digital payment services, the rule sought to introduce greater regulatory scrutiny over these platforms.
Pushback from Industry and Lawmakers
Critics of the CFPB rule argue that it imposes unnecessary regulatory burdens on innovative financial technology companies.
Senator Pete Ricketts defended the move to repeal the oversight, stating:
“This one-size-fits-all solution in search of a problem unnecessarily expands the CFPB’s authority. Our legislation eliminates barriers to innovation, cuts red tape, and supports our job-creators.”
Similarly, Penny Lee, CEO of the Financial Technology Association, voiced concerns over the rule’s broad scope, arguing:
“The final rule was deeply flawed, failed to define a market or identify specific risks to consumers, and conflated diverse uses and products into a one-size-fits-all approach.”
Regulatory Battles and Industry Response
The decision also aligns with ongoing efforts by X owner Elon Musk to challenge the CFPB’s authority. Musk, who has been vocal about rolling back regulatory oversight, recently posted “CFPB RIP” with a tombstone emoji on X, signaling his stance against the rule.
Meanwhile, the CFPB maintains that the regulation is necessary to level the playing field between Big Tech firms and traditional financial institutions, ensuring that digital payment platforms adhere to consumer protection laws.
CFPB’s Changing Regulatory Approach
Since former CFPB Director Rohit Chopra was dismissed by the Trump administration, the agency has been undergoing a shift in regulatory focus under acting Director Russell Vought. In recent weeks, the CFPB has also dropped lawsuits against JPMorgan Chase, Bank of America, and Wells Fargo concerning fraud issues on the Zelle P2P payment network.
Next Steps
The resolution now moves to the House of Representatives, where its fate will be determined. If passed, it could significantly limit regulatory oversight on digital payment providers, reinforcing the influence of Big Tech in financial services while reducing compliance requirements for these firms.
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