The CFPB has released a list of nine “Consumer Protection Principles” that are intended to express the CFPB’s “vision of consumer protection in new faster payments systems.” The CFPB has previously shown support for the development of faster payment systems. In his November 2014 remarks to the Clearing House, Director Cordray suggested that sooner, rather than later, the industry should invest the billions of dollars required to build a payment system with “faster and even real-time payments” where “the interests of consumers remain at the top of [bankers’] minds.” In February 2015, CFPB Associate Director David Silberman sent a letter to NACHA indicating the CFPB’s support for same day ACH services.
In releasing the principles, the CFPB stated that it “wants to ensure that consumer protections are at the forefront as new and improved payment systems are developed.” The CFPB’s principles deal with: (1) consumer controls over payments (such as allowing consumers to limit the time period for which an authorization is valid), (2) data protection, (3) fraud and error resolution procedures, (4) transparency in information about transaction status and disclosures about costs, risks, funds availability and security of payments, (5) affordable cost and cost disclosure, (6) allowance of access through qualified intermediaries and non-depositories, such as mobile wallet providers and payment processors, (7) faster funds availability, (8) security protections and credential value limits, and (9) strong accountability mechanisms to curtail system misuse.
The CFPB’s “principles” may foreshadow another attempt by the CFPB to take an expansive approach to its jurisdiction. Some payments firms, such as large banks that provide payments services, are subject to CFPB supervision and the CFPB also has the authority to enforce the Electronic Funds Transfer Act. However, many payments firms are not subject to CFPB supervision, and the CFPB’s payments principles go beyond the requirements established by Congress in the EFTA and elsewhere. Based on the CFPB’s history, we would not be surprised to see attempts to legislate through enforcement actions in this area.
In addition, someone will have to bear the substantial costs involved in building a faster payment system. Given the low rates set for debit card interchange fees by the Durbin Amendment, many industry players will likely be uninterested in funding innovations whose costs they cannot recover.