Repeal leaves consumers vulnerable to fraud and privacy risks on big tech’s payment apps
WASHINGTON DC – In a major win for big tech at the expense of consumers, the House voted today to overturn a new rule adopted by the Consumer Financial Protection Bureau that gave the Bureau the authority to supervise digital payment apps offered by big tech companies, just as the Bureau currently does with large banks, credit unions and other financial institutions. The Senate passed a similar repeal resolution in March.
“By voting to repeal the CFPB’s rule, Congress is turning a blind eye to the fraud that runs rampant on payment apps and the privacy risks users can face when big tech companies collect their sensitive financial data and share it widely with other companies,” said Chuck Bell, advocacy program director at Consumer Reports “Today’s vote weakens the CFPB’s ability to stop unfair practices that put consumers who use payment apps at risk and ensure that big tech companies are following the law.”
The CFPB’s rule (also known as the larger participant rule) applies to digital wallet and payment providers handling more than 50 million transactions per year. The most widely used apps subject to the rule process an estimated 13 billion consumer payment transactions annually, according to the CFPB.
In 2023 alone, consumers reported losing $210 million to scams on peer-to-peer payment apps, a staggering 62 percent increase from 2021. In addition, users who accidentally send a payment to the wrong person find it nearly impossible to get their money back.
Consumer Reports evaluated P2P apps in 2022 and found that their policies for resolving fraud and errors left users at risk of losing their money. In most cases, consumers are left unprotected when they are scammed into sending payments to crooks on payment apps. Last September, CR published a blog post summarizing an updated review of the policies of 11 P2P app providers and found little improvement since its previous evaluation.
CR’s 2022 evaluation also found that consumers using P2P apps face privacy risks because app providers share their personal information widely and make it difficult for users to delete their data. In addition, CR found that Apple Cash, Cash App and Venmo require users to meet sometimes confusing conditions to ensure their funds held in the payments portion of the app are protected by Federal Deposit Insurance Corporation insurance.
Media contact: Michael McCauley, michael.mccauley@consumer.org