The Consumer Financial Protection Bureau has released guiding principles for financial payment systems to ensure consumer protection. Ethan Ostroff and Mary Zinsner of Troutman Sanders note, “The CFPB guidelines reflect the intent of the CFPB to extend its supervisory authority more aggressively in the payments industry, particularly with respect to nonbank entities.”
Indeed, the authors say the CFPB is clear that companies developing financial technologies should be doing so with consumers in mind, as existing systems expose them to significant security risks. Here are some takeaways from the new guidelines:
- Cost Comparison: Fees must be disclosed to consumers in such a way they can make a cost comparison, according to the guidelines. Additionally, “fee structures should not obscure the full cost of making or receiving a payment.”
- Data and Privacy: Systems must be designed to protect against misuse of data and specify what can be transferred, according to the CFPB. Consumers also must be informed on how the data is transferred throughout the system, how it can be used and any potential risks.
- Fraud and Error Resolution Protections: “System mechanisms must be available for consumers to reverse erroneous and unauthorized transactions quickly once identified and provide consumers with regulatory protections,” say the authors.
