CFPB seeks public input on privacy protections in digital payments

The agency is seeking comments on how existing financial privacy laws can be applied to address issues such as excessive data collection and personalised pricing. Additionally, the CFPB is soliciting input on a proposed interpretive rule to clarify how the Electronic Fund Transfer Act (EFTA), which protects consumers against errors and fraud, applies to emerging digital payment methods. These include platforms offered by technology firms, video gaming systems, stablecoins, and other forms of digital currency not yet widely used for consumer transactions.

CFPB officials noted the importance of trust in digital payment systems, stating that consumers should feel secure when using such tools for daily expenses, free from harmful surveillance or errors. The agency's public request is intended to ensure that long-standing privacy and consumer protection laws adapt to the evolving payments landscape.

Emerging digital payment mechanisms and regulatory concerns

The CFPB has observed the growing use of alternative payment systems, often tied to technology companies and gaming platforms. For instance, some video games offer proprietary currencies for in-game transactions. Similarly, stablecoins have gained traction for trading and investment and may see increased consumer use.

Current privacy protections, largely shaped by the Gramm-Leach-Bliley Act (GLBA) and Regulation P, require financial institutions to disclose their data practices and provide opt-out options. However, the CFPB's research suggests these measures may be insufficient to address modern data surveillance practices, which include the collection of data beyond transactional needs, such as location and browsing history. Such practices could enable personalised pricing based on individual consumer profiles.

A Government Accountability Office (GAO) report highlighted the inadequacy of existing privacy frameworks, noting low consumer opt-out rates and outdated privacy notices that fail to reflect modern data-sharing practices. The CFPB is asking for public comments on the effectiveness of existing regulations and suggestions for strengthening the current framework. The deadline for submitting comments on the Request for Information is 11 April 2025.