In a significant legal challenge, two powerful tech industry groups, NetChoice and TechNet, are suing the U.S. Consumer Financial Protection Bureau (CFPB) over a new rule that would broaden the agency’s scrutiny of payment apps and digital wallets.
The rule, which was proposed by the C.F.P.B. in November 2024, would allow the agency to regulate companies such as Apple Wallet, Google Pay, and Venmo if they process over 50 million transactions per year. The CFPB contends that the action is necessary to shield consumers from fraud, privacy violations, and account closures with little warning and advantages that bank customers already enjoy.
However, NetChoice and TechNet vehemently argue against the rule, saying it goes beyond the CFPB’s legal authority. The groups alleged the bureau in a lawsuit filed in federal court in Washington, D.C., enacted a policy without showing serious risks to consumers or gaps in regulation existed.
In its complaint, the group called the rule “arbitrary and capricious” and said it could curb innovation, harm competition and increase costs for users.
Chris Marchese, NetChoice’s director of litigation, called the rule an “unlawful power grab.” Carl Holshouser, an executive at TechNet, said the regulation could even enable unnecessary oversight of unrelated areas, such as tax payments, which are outside the CFPB’s jurisdiction.
The CFPB declined to comment on the lawsuit but in the past has defended the rule. “Digital payments have gone from novelty to necessity,” said CFPB Director Rohit Chopra in announcing the measure, which reinforced the need for consistent protections given the increasing role digital payments play in consumers’ daily lives.
The case, TechNet et al v. CFPB et al, is pending in the U.S. District Court for the District of Columbia. Its outcome could have major ramifications for how large tech firms in the financial industry are regulated.
