CR’s Delicia Hand to testify at House hearing on fintech innovations and regulations
WASHINGTON DC – In testimony today before the House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, Delicia Hand, senior director of the digital marketplace for Consumer Reports, will highlight some of the challenges consumers have faced with fintech products and the need for clear rules of the road to ensure they are adequately protected.
The Subcommittee’s hearing, “Delivering for American Consumers: A Review of Fintech Innovations and Regulations,” is scheduled for today beginning at 10am EST and will be livestreamed.
“Consumers want innovation that works, but they expect clear information about costs, fair treatment when problems arise, and someone to be accountable when their money is at stake,” said Hand. “Consumers are not asking Congress to stop innovation. They want clear rules of the road that ensure digital financial products are affordable, transparent, and trustworthy.”
In her testimony to the Subcommittee, Hand notes that CR’s evaluations of banking apps, buy now, pay later services, peer-to-peer payments, and digital wallets have documented a number of patterns: opaque fee structures, barriers to refunds and resolving disputes, excessive data sharing and unclear accountability when things go wrong.
In CR’s peer-to-peer payment research, for example, consumers reported confusion about disputes rights and liability. In buy now, pay later evaluations, CR documented refund barriers, stacked obligations across merchants, and difficulty understanding total exposure. In banking apps, consumers reported uncertainty about fees, data sharing and fraud protections. In crypto and other app-based financial platforms, many consumers worry about fraud, losing access to funds, and the lack of meaningful consumer protection.
Hand’s testimony points out that the Subcommittee is considering legislation that would expand fintech’s activity and waive existing consumer protections while oversight and enforcement activities by the Consumer Financial Protection Bureau has been dramatically rolled back. Hand notes, “That combination — more industry-friendly rules and fewer cops on the beat — is a recipe for consumers bearing all the risk while companies capture all the benefit. If this Congress is serious about ‘delivering for consumers,’ it should be strengthening the CFPB, not looking the other way as it’s dismantled.”
In particular, CR has raised concerns about the “Earned Wage Access Consumer Protection Act,” which is currently being considered by the Subcommittee. EWA products enable workers to get a portion of their already earned wages before their scheduled payday and can come with high fees depending on how they are structured. While the bill contains some meaningful consumer protections, it limits the ability of policymakers to address harms that emerge as the market evolves. The bill excludes EWA from the definition of “credit” under federal law, preempts state authority to classify these products based on how they actually function, and fails to establish a clear standard of affordability.
Likewise, the Subcommittee is considering the Financial Services Innovation Act, which would allow companies to petition regulators for modifications or waivers of existing regulatory requirements in order to deploy technology-enabled financial products. While the intent is to promote innovation, the practical effect is to permit reduced compliance with existing consumer protection safeguards at precisely the point when automation enables decisions to operate at greater scale, speed, and opacity.
See Delicia Hand’s complete testimony for a more detailed explanation of some of the challenges consumers have faced with recent fintech products and CR’s recommendations for policymakers.
Media Contact: Michael McCauley, michael.mccauley@consumer.org