Apple, Google, Paypal To Face Federal Scrutiny Over Payment Practices

Major technology companies, including Apple Inc. AAPL, Alphabet Inc. GOOGL GOOG and PayPal Holdings Inc. PYPL, will undergo regular federal examinations concerning their payment systems, marking a significant shift in regulatory oversight.

According to a Barron’s report, the Consumer Financial Protection Bureau (CFPB) announced a proposal on Tuesday that subjects large nonbank consumer payment companies to routine scrutiny. This move aims to ensure these tech giants comply with laws relating to unfair or deceptive practices and data privacy protections.

Until now, these nonbank technology firms have not been subjected to the same level of regular examinations as banks, despite being required to adhere to the same regulations. The CFPB’s proposed rule targets companies that process over 5 million transactions annually, a benchmark that includes Apple, Google, and PayPal, among others.

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“Today’s rule would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight,” CFPB Director Rohit Chopra stated in a press release.

The scrutiny by the CFPB into tech companies’ payment platforms began in 2021. The bureau had previously ordered information on business practices from a range of tech giants, including Meta Platforms,  Amazon.com Inc., and Block Inc.

In recent remarks, Chopra highlighted the distinction between banks and nonbank tech firms, emphasizing the risks posed by Big Tech’s encroachment into financial services.

The CFPB is welcoming public comments on this proposed rule until Jan. 8 or 30 days following its publication in the Federal Register, depending on which date is later.

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