The final rule allows the CFPB to supervise these companies in critical areas such as privacy, data collection practices, and error and fraud resolution. Credit: DCStockPhotography/ Shutterstock.

The Consumer Financial Protection Bureau (CFPB) has finalised a rule that will bring large nonbank companies offering digital funds transfer and payment wallet apps under its supervision.  

On 17 November 2023, the agency proposed a rule to define larger participants in the market for general-use digital consumer payment applications. 

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The final rule allows the CFPB to supervise these companies in critical areas such as privacy, data collection practices, and error and fraud resolution.  

The bureau is concerned about the potential for digital payment apps to be used in defrauding vulnerable groups like older adults and active-duty service members. 

This rule also addresses the issue of ‘debanking’, where consumers face disruption due to sudden app access loss or payment processing issues.  

The CFPB’s authority now includes conducting examinations to ensure legal compliance. 

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There are changes made from the initial proposal including a higher transaction threshold for supervision to companies processing more than 50 million transactions annually.  

This rule is the sixth of its kind, following previous rules on consumer reporting, debt collection, student loan servicing, international money transfers, and automobile financing.  

The rule will take effect 30 days after its publication in the Federal Register. 

CFPB Director Rohit Chopra said: “Digital payments have gone from novelty to necessity and our oversight must reflect this reality. The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.” 

This May, the CFPB issued a rule stating that Buy Now, Pay Later (BNPL) lenders are credit card providers, mandating them to offer consumers similar legal protections, including the right to dispute charges and demand refunds for returned products purchased with BNPL loans.