NetChoice and TechNet challenge CFPB expansion of regulatory authority over digital payment services, citing overreach and threats to innovation.
The lawsuit, filed in the U.S. District Court for the District of Columbia, claims that the CFPB is exceeding its statutory mandate. It states that the bureau is imposing unnecessary regulations that threaten innovation and consumer choice.
CFPB’s Regulatory Expansion Sparks Controversy
The CFPB’s new rule aims to extend its supervisory reach over digital payment applications and related financial technology services. However, NetChoice and TechNet argue that this expansion constitutes an unlawful power grab that contradicts congressional intent. They contend that the rule imposes unnecessary regulatory burdens on businesses, stifling innovation and limiting consumer options.
NetChoice and TechNet Challenge CFPB Overreach
Chris Marchese, Director of Litigation at NetChoice, strongly criticized the rule. He stated, “The CFPB’s unlawful power grab undermines the rule of law. It further bloats the administrative state. It puts American consumers and innovation at risk.” He emphasized that competition and innovation—not excessive government intervention—have driven success in the digital payments industry.
Carl Holshouser, Executive Vice President of TechNet, echoed these concerns. He warned that the rule could subject businesses to excessive government scrutiny beyond their digital payment operations. “This isn’t regulation; it’s overreach and risks creating a chilling effect on innovation that drives economic growth and benefits millions of consumers,” Holshouser said.
Potential Impact on Consumers and Businesses
The lawsuit highlights several key issues with the CFPB’s approach:
- Regulatory Overreach: The rule expands CFPB’s oversight beyond its legal boundaries, raising concerns about separation of powers.
- Threat to Innovation: Increased regulatory burdens could discourage startups and established companies from developing new digital payment solutions.
- Higher Costs for Consumers: Compliance costs may be passed down to consumers. This can lead to increased prices and fewer choices in the marketplace.
A Fight to Preserve Innovation in Digital Payments
NetChoice and TechNet remain committed to protecting businesses and consumers from what they describe as excessive government control. They argue that regulatory policies should foster competition and innovation rather than create unnecessary roadblocks.
“Protecting consumers should mean encouraging innovation, not smothering it under unlawful regulation,” Marchese concluded.
As the case moves forward, industry leaders will closely watch its outcome. Policymakers will also be interested. The results could have significant implications for the future of digital payments in the United States.
Read the continued coverage on this lawsuit here.