CFPB’s Rule-Making Agenda Hints Summer May Get Heated for Big Tech

The grills are hot.

The July Fourth fireworks are primed to sizzle in the night sky.

For Big Tech, a long hot summer may give way to …

… well, perhaps not all that much relief.

At least not on Capitol Hill.

And certainly not when it comes to the payments ambitions of some of the marquee names in technology and in commerce.

To that end, the Unified Agenda of Federal Regulatory and Deregulatory Actions, as published by the Office of Information and Regulatory Affairs, lays out what will be under consideration from June of this year to June 2024. That’s a long time-frame, to be sure, but it’s a roadmap of what we’ll see from the likes of the Consumer Financial Protection Bureau (CFPB).

The agenda, as noted above, and as laid out by the CFPB, includes the “Supervision of Larger Participants in Consumer Payment Markets.” The CFPB has contended that Section 1024 of the Dodd-Frank Wall Street Reform and Consumer Protection Act allows the bureau to supervise nonbanks for compliance with federal consumer financial laws — and that supervision can extend to the “larger participants” when it comes to consumer payments.

The CFPB’s agenda in the months ahead, updated late last month, signals an ambitious scope, building on, and in some cases expanding on, the semiannual update issued at the end of last year. The agenda includes a “pre-rule” stage on overdraft fees.

The “pre-rule” stage has been defined by the agency as an “optional early step” in the rulemaking process … while it should be noted that the supervision of larger participants rules is still in the “proposed” stage. The “Registry of Supervised Nonbank” covered entities in the “final rule stage.”

In at least some cases, final rules can be and are issued without a comment period, so it’s possible we’ll have movement here. The registry proposal, which would document companies that had/have been breaking the law, stretches back to the end of last year.

Fireworks in July?

The supervisory (proposed) rule on the larger participants could come as soon as this month, according to the timetable that is offered.

And it would follow the October 2021 action by the CFPB, ordering information on business practices of Big Tech firms operating payment systems in the U.S.

“The information will help the CFPB better understand how these firms use personal payments data and manage data access to users so the Bureau can ensure adequate consumer protection,” the CFPB said then. The initial orders were sent to Amazon, Apple, Facebook, Google, PayPal and Square. The bureau also noted that it would look into Alipay and WeChat Pay.

The orders focused on, among other activities, data harvesting and monetization, user choice and whether these firms might be acting in an anti-competitive manner.

Back in April, CFPB Director Rohit Chopra noted to Yahoo Finance that concerns are swirling around stablecoins, around data collection and use, and of course, the security surrounding it all.

Stablecoins, Chopra said, could conceivably start “riding the rails of a Big Tech platform or a card network.”

Elsewhere, he said of the platforms, “There are some questions we have … about how do some of these services decide to kick a merchant off or kick a user off? How are they actually using all the data that they’re collecting through our phones and through what we buy?”

Open banking, of course, looms large over all of these players, and financial services as a whole (and the CFPB has stated a timetable of “a few months” in getting comments on a formal open banking proposal, with finalization next year).

July Fourth is a holiday, and the banks and Congress and the agencies that populate Capitol Hill are quiet, for a brief moment. And then the proposals, the rules, the commentary will fly fast and furious.