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from the Fed, and as of late last year it had about 1,700 and that they were protected from prolonged freezes and
employees. Most of those employees were let go under a unnecessary deactivation (debanking).
February 2025 reduction in force.
The CFPB has similar authority over regulated financial
At the time of this writing that reduction (to 200 workers) institutions. Supervisory authority differs from regula-
is mired in a legal battle. Still, the agency's fiscal year 2026 tory authority. Agencies typically are assigned regulatory
budget is expected to be much smaller than previously. authority through lawmaking, and they create and en-
force regulations over specific industries, like banks. The
Several consequential rules adopted by the CFPB during CFPB's proposed supervisory rule was hotly contested by
the Biden Administration have been rescinded. In April, a big tech companies, and the law banishing the rule was
judge for the U.S. District Court for the Northern District authored by a pair of Republican lawmakers from Nebras-
of Texas voided a CFPB rule that capped at $8 late fees that ka, Senator Pete Ricketts and Representative Mike Flood.
can be collected by credit card issuers.
Giving big tech companies a pass on federal oversight of
The decision to cap late fees was controversial, and sev- their payment apps would seem to give them an advan-
eral groups representing businesses and banks had sued tage over financial institutions bound by consumer pro-
to stop it from going into effect. The CFPB had planned to tection laws. I reached out to Ken Musante, a long-time
fight the suit but declined to do so after Chopra's depar- merchant sales professional and consultant for his take,
ture. and he seemed to agree.

Since Chopra left the CFPB, it has also dropped a lawsuit "To the extent big tech wants to act like a big bank, the
filed against JPMorgan Chase, Bank of America, Well same rules should apply," Musante said. Noting that the
Fargo and Zelle, a peer-to-peer payment network owned rule would have applied only to apps handling 50 mil-
by those three and other banks, and operated by Early lion transactions or more a year, he added "Companies
Warning Services. The group was accused of failing to processing this many transactions per year are effectively
protect Zelle users from "widespread fraud." That lawsuit banking institutions, regardless of their designation."
was filed in a U.S. District Court in Arizona, where EWS CFPB gets new marching orders
is headquartered.
An April 16 memo from Mark Paoletta, chief legal offi-
The bureau also has backed off an interpretive ruling that cer at the CFPB, sets out the CFPB's priorities under the
would have subjected buy now, pay later transactions to Trump Administration.
Regulation Z. Reg Z is the federal rule set that covers con-
sumer credit extensions. It includes requirements for ac- "To avoid the ever-increasing number of supervisory ex-
count opening disclosures, billing statements, changes in ams, which are multiplying the cost of running businesses
terms and treatment of credit balances. That ruling was and raising consumer prices, supervision shall decrease
challenged by the Financial Technology Association in the the overall number of events by 50 percent," Paoletta wrote
U.S. District Court for the District of Columbia.. in an internal memo that got posted to X.
Big tech gets a pass on payments Paoletta noted that the bureau's "focus will shift back to

Meanwhile, the Republican-led Congress put the kibosh depository institutions, as opposed to non-depository in-
on a CFPB rule to supervise big tech companies' payment stitutions." And, he added, "actual fraud against consum-
apps. The rule was to apply to companies with apps han- ers where there are identifiable victims with material and
dling at least 50 million transactions a year. As such, it measurable consumer damages" and not just the "percep-
would have applied to Apple Pay, Google Pay, PayPal, tion" that consumers made "wrong choices."
Square, and potentially X. (The social media platform that
has made clear its plans to get into the payments busi- The memo listed several specific priorities. These include
nesses.) mortgages (top priority), fraudulent overcharges and fees,
and providing redress to service members and their fami-
The consumer watchdog agency, in approving the rule, lies. It also stated that the focus will be on getting money
estimated the most widely used among covered apps col- back for and returning it to consumers, rather than impos-
lectively were processing over 13 billion consumer pay- ing penalties.
ments a year.
Patti Murphy, senior editor at the Green Sheet, is president of ProScribes
The plan was for the CFPB to have supervisory author- Ink. Her insights involving payments are a regular feature of the
ity over these companies, not regulatory authority. Thus, Merchant Sales Podcast.
it would have been responsible for ensuring the compa-
nies complied with consumer protection laws, also ensur-
ing that consumers were protected from fraud, that their
sensitive personal information was adequately protected,

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