Senate to Vote Wednesday on Eliminating Oversight of Payment Apps; CFPB Drops Suit Against Zelle
WASHINGTON – On Wednesday, the U.S. Senate is expected to vote on a resolution, sponsored by Sen. Pete Ricketts (R-NE), that would weaken the ability of the Consumer Financial Protection Bureau (CFPB) to prevent fraud and privacy violations by digital payment apps and wallets used by millions of people. The resolution under the Congressional Review Act would overturn a rule that gives the CFPB the authority to examine big tech companies like PayPal’s Venmo – or, soon, Elon Musk’s X Money – the same way it supervises banks to make sure they are complying with laws that protect sensitive financial information and give people the right to dispute errors and unauthorized charges.
The vote is expected to come just hours after the CFPB dismissed a lawsuit against the bank payment app Zelle and three of the nation’s largest banks for failing to protect consumers from fraud in the peer-to-peer (P2P) payment network. When the CFPB filed suit last year, it alleged that hundreds of thousands of customers had lost more than $870 million using Zelle. Zelle is operated by Early Warning Services, which is owned by seven large banks, including Bank of America, JPMorgan Chase, and Wells Fargo.
“The millions of people who use digital payment apps are vulnerable to fraud and misuse of their private data, but Congress is considering a bill to make Big Tech companies exempt from oversight,” said Lauren Saunders, associate director at the National Consumer Law Center. “Stopping oversight of big tech payment apps will benefit Elon Musk’s personal financial interests as his social media platform X is about to launch its own payment app. And by dropping the Zelle lawsuit, the Trump Administration is abandoning the hundreds of thousands of consumers who were ignored by big banks when they disputed fraud on their accounts.”
“It is a sad irony that a Nebraska senator is sponsoring this bill to weaken fraud oversight of payment apps like Cash App and Elon Musk’s X Money when Nebraska residents are harmed by fraud. Just a week ago, the Nebraska Attorney General’s Office and the Lancaster County Sheriff sent out an alert about a new scam, and Nebraska was among the 48 states that recently took action against Cash App for violating anti-money laundering rules designed to stop criminals from using the platform. Senator Ricketts’ bill would stop the CFPB from making sure that payments apps like X Money and Cash App are not giving criminals access to accounts used to collect money from these frauds,” said Carla Sanchez-Adams, senior attorney at the National Consumer Law Center.
In addition to the 48-state action, in January the CFPB – under the previous administration – ordered the operator of Cash App to pay $175 million and fix its failures on fraud.
“Sen. Rickett’s bill will make it harder for the CFPB to uncover when payment apps like Cash App or Elon Musk’s soon-to-be-launched X Money give criminals a way to steal your money,” Sanchez-Adams added.
If Congress votes to overturn the rule, it would create a blind spot for fraud in popular peer-to-peer payments, leaving users at risk of privacy violations and loss of vast sums of money transferred over those apps.
Servicemembers, especially those stationed overseas, are more likely to use payment apps and have been particularly harmed, based on skyrocketing complaints to the CFPB.
“Senators should not be in the business of removing vital consumer protections for our soldiers and sailors stationed far from home who use payment apps. The Big Tech payment rule was a welcome protection for servicemembers and their families, and senators shouldn’t take it away,” Saunders said.
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