US consumer finance watchdog sued for treating digital wallets like banks
Two technology trade groups, TechNet and NetChoice, have filed a lawsuit against the US Consumer Financial Protection Bureau (CFPB) over a new rule that treats payment apps and digital wallets as banks. The rule, issued in December, expands CFPB's authority to oversee non-bank financial service providers, specifically targeting larger payment apps like Apple Pay, Google Wallet, PayPal, Venmo, and Cash App. Plaintiffs argue the CFPB's actions create unnecessary barriers for businesses and threaten innovation. They claim the rule is arbitrary and exceeds the Bureau's authority, as many of these companies are already regulated at the state level. The lawsuit coincides with a CFPB fine against Cash App-parent Block Inc. for inadequate fraud protection, totaling up to $120 million in compensation and a $55 million penalty.
