The Consumer Financial Protection Bureau is attempting to protect customers against crypto payment fraud and excessive surveillance. On Friday, the bureau issued two proposals for public participation and feedback.
One proposal seeks ways to prevent intrusive data collection when clients make digital payments on large tech platforms. The second proposes strengthening laws protecting clients against fraud to cover those who make digital payments through gaming and other cryptos.
CFPB Director Rohit Chopra said in a statement.
When people pay for their family expenses using new forms of digital payments, they must be confident that their transactions are not tainted by harmful surveillance or errors.
~Rohit Chopra
Trump’s leadership transition sparks uncertainty over CFPB proposals
It is unclear how the proposals will end as the current leadership may change upon Trump’s swearing-in on January 20. There has been speculation of Trump replacing Chopra, yet no specific name for the replacement has been tabled. Trump has taken a pro-Bitcoin stand, suggesting he wants to model the US as the world’s crypto capital. He looks forward to enabling the crypto environment than the Joe Biden administration.
According to the CFPB, they proposed consumer digital payment privacy after conducting research that revealed that some payment mechanisms gather more data that is irrelevant to transactions.
According to the CFPB, this data could be used to allow payment companies to facilitate personalized pricing, where a price is based on factors specific to an individual consumer. The deadline for public comment is April 11.
CFPB tightens rules on big tech to protect digital payment users
Some big tech companies collect too much data using their platforms as surveillance tools. Chopra felt that strengthening regulations would be critical. The CFPB’s open banking rules, released in October, curtail companies’ ability to use payment data for advertising and marketing purposes.
A rule finalized in November gave the CFPB the mandate to supervise payment tools from Apple Inc., Alphabet Inc.’s Google and other large digital payment providers.
The other proposal seeks to establish the Electronic Fund Transfer Act, which shields consumers’ right to dispute payment carters for new payment systems. Although stablecoins operate around trading and settlement, they are likely to grow beyond that scope in the fullness of time. Both Stripe Inc., Visa Inc., and PayPal Holdings Inc. have stablecoin initiatives.
The regulator explained that the proposals aim to reexamine marketwide expectations regarding the available payment laws through consumer lenses without seeking court orders and decisions. The deadline for the second proposal is March 31.
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