GOP wants to strip protection from consumers who bank on Big Tech

House Majority Leader Steve Scalise has complained about Big Tech’s abuses of Section 230, saying: “It’s going be one of these things that we’re going to bring legislation on to finally confront the abuses that Big Tech has been having both with their platforms, but also with the laws that were giving them liability protection.” 

But while he doesn’t trust the industry to tell the truth, he is hoping to prevent the government from protecting consumers whose money is robbed by such companies.

House Republicans intend to potentially reverse a recent Consumer Financial Protection Bureau (CFPB) rule that grants the agency oversight of Big Tech companies’ ventures into digital payments.

The move, which could also prevent the CFPB from issuing similar rules in the future, is part of a broader effort by GOP lawmakers to roll back federal regulations using the Congressional Review Act (CRA).

The CFPB rule, finalized earlier this year, aims to extend the agency’s regulatory authority to non-banking companies offering digital payment services, including tech giants like Apple and Google.

These companies operate popular payment apps that facilitate peer-to-peer transfers, mobile wallets, digital payment services, and other financial services.

These are tools that consumers use to send money or make payments for personal, family, or household purposes, but they are vulnerable to exploitation and abuse.

Under the rule, such platforms would be subject to the same level of oversight as traditional financial institutions, ensuring consumer protections and compliance with federal regulations.

In short, the CFPB is stepping up its oversight of big digital payment companies to protect consumers and ensure these companies are following the law, but it’s not creating new regulations for them to follow.

However, House Republicans argue that the rule represents regulatory overreach and could stifle innovation in the rapidly evolving fintech sector.

Last week, House Majority Leader Steve Scalise (R-La.) released a list of 10 federal rules that Republicans are prioritizing for potential reversal under the CRA. The CFPB’s digital payments rule is among the targeted regulations.

The CRA allows Congress to overturn agency rules by passing joint resolutions of disapproval within 60 legislative days of a rule’s finalization.

If such a resolution is enacted and signed into law by the president, the rule in question is nullified, and the agency is prohibited from issuing a “substantially the same” rule in the future unless explicitly authorized by subsequent legislation.

If successful, the GOP’s effort to reverse the CFPB rule would be a significant win for Big Tech companies, which have lobbied against increased regulatory scrutiny.

It would also benefit other tech-driven payment platforms, such as Elon Musk’s X (formerly Twitter), which recently announced plans to launch “X Money,” a digital payments service featuring peer-to-peer transfers and instant bank transactions.

The CFPB rule is necessary to protect consumers and ensure a level playing field in the financial services industry.

Reversing the rule would leave consumers vulnerable to potential risks associated with unregulated digital payment systems, such as fraud, data breaches, and unfair practices.

Critics of the GOP’s move, including consumer advocacy groups and some Democratic lawmakers, have characterized it as a “giveaway” to Big Tech, arguing that it prioritizes corporate interests over consumer protection.

They also express concern that blocking the CFPB from issuing similar rules in the future could hinder the agency’s ability to adapt to emerging financial technologies.

The outcome of the GOP’s effort remains uncertain, as it would require bipartisan support in the Senate and the president’s signature to become law.

However, the announcement underscores the ongoing debate over the appropriate level of regulation for Big Tech’s expanding role in the financial sector and the broader tension between innovation and consumer protection.