The leading U.S. consumer financial regulator has put forth a plan to oversee the digital payment and smartphone wallet services offered by tech giants. This move comes in response to these services becoming as large and widespread as traditional payment methods, but without adequate consumer protection measures.
The proposal from the Consumer Financial Protection Bureau (CFPB) aims to subject companies such as Alphabet, Apple, PayPal, and Block's CashApp to regulatory oversight similar to that of banks.
CFPB examiners would assess their privacy safeguards, executive conduct, and adherence to laws that prohibit unfair and deceptive practices.
If the proposal is approved, it will apply to approximately 17 companies responsible for more than 13 billion annual payments, according to a CFPB official.
This marks a significant step by CFPB Director Rohit Chopra to extend the agency's authority over Big Tech, a sector he has frequently criticised for issues related to privacy and competition.
Chopra has been gradually intensifying the CFPB's scrutiny of the tech sector since taking office in 2021. This includes efforts to understand how Big Tech companies handle consumer data and launching an investigation into their payment platforms.
In a recent speech, Chopra highlighted that CFPB research had revealed how tech giants collect substantial amounts of consumer payment data with limited restrictions, minimal transparency, and confusing corporate policies. This situation puts consumers at risk of data surveillance similar to practices seen in China.
CFPB officials emphasised the need to examine privacy compliance at these large firms, particularly considering their business models heavily rely on monetising consumer data.