- Two Republicans are trying to overturn a federal regulation that requires payment apps like Venmo to follow the same rules as banks. To nullify the rule, Congress must pass a resolution and have it signed by the president.
- The rule was approved in the final weeks of the Biden administration by the Consumer Financial Protection Bureau.
- Unless the rule is overturned, the payment companies will be held to the same standard as banks and credit unions in regards to privacy, surveillance, transaction disputes, fraud and account freezes or closures.
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Members of Congress are introducing a resolution to nullify a new regulation for digital consumer payment applications like Venmo and PayPal. The rule was created by the Consumer Financial Protection Bureau (CFPB) during the final weeks of the Biden administration, and requires the payment companies to follow similar rules as banks.
Who brought forward the legislation, and why?
Sen. Pete Ricketts, R-Neb., and Rep. Mike Flood, R-Neb., are bringing forward a Congressional Review Act resolution, which allows Congress to override agency rules with the approval of the president.
“This one-size-fits-all solution in search of a problem unnecessarily expands the CFPB’s authority,” Sen. Ricketts said in a statement. “Our legislation eliminates barriers to innovation, cuts red tape and supports our job creators.”
In creating the rule, the CFPB expanded its own authority under the Consumer Financial Protection Act. Unless the rule is overturned, the payment companies will now be held to the same standard as banks and credit unions in regards to privacy, surveillance, transaction disputes, fraud and account freezes or closures — known as debanking.
“Digital payments have gone from novelty to necessity, and our oversight must reflect this reality,” former CFPB Director Rohit Chopra said in November. “The rule will help to protect consumer privacy, guard against fraud and prevent illegal account closures.”
How will this impact apps and companies?
The rule applies to companies that handle more than 50 million transactions per year. The CFPB estimated the most popular apps covered by the rule collectively process 13 billion payment transactions annually.
Ricketts pointed out that payment companies are already regulated at the federal and state level, making this rule duplicative. He also said the CFPB significantly underestimated the cost that companies would incur during any audits.
“[They] said it only costs $25,000 for an audit from CFPB, and I can tell you right now that that’s probably not even enough to cover lawyers fees for the first day of work when you get an audit by somebody like the CFPB,” Ricketts explained.
The rule has already taken effect. It’s one of multiple Biden-era regulations that congressional Republicans are trying to overturn.
Editor’s Note: Pete Ricketts is the son of Straight Arrow News founder Joe Ricketts.
