On July 9, 2015, the Consumer Financial Protection Bureau continued its focus on payment processing and joined the Federal Reserve’s efforts to develop faster and more secure payment systems by releasing its “Vision of Consumer Protection in New Faster Payment Systems”. The CFPB recognized the added benefits to consumers that evolving payment technology provides, including: improving efficiency, reducing transaction costs for participants, and reducing credit and fraud risks.
While noting the payment processing platform’s benefits to consumers, the CFPB listed several principals for the new faster systems:
- Consumer Control Over Payments
- Strict Data and Privacy Controls
- Fraud and Error Resolution Protections
- Transparency in Payment and Receipt of Funds
- Clear Fee Disclosures
- Wide accessibility
- Accurate Funds Availability
- Security and Payment Credential Value
- Strong Accountability Mechanisms that Effectively Curtail System Misuse
The CFPB has broad enforcement jurisdiction over businesses that violate federal consumer financial laws. Because most regulations are behind the rapidly developing innovations in the payment systems space, the CFPB will likely wield its flexible UDAAP authority to regulate fintech businesses. As such, FinTech companies would be wise to take these principles to heart.