Senate Republicans scrap consumer protections for payment apps

Senate Republicans voted on March 5 to gut a rule protecting users of electronic payment apps, such as PayPal and Venmo.

The Consumer Financial Protection Bureau (CFPB) finalized a rule in November requiring apps handling more than 50 million transactions per year to follow the same rules as large banks. The rule specifically required the apps to implement fraud protection protocols and give users more control over their personal data.

Every Republican senator voted to abolish the rule except for Missouri Sen. Josh Hawly. Zero Democrats backed the effort.

The CFPB estimates that the most popular payment apps handle over 13 billion transactions annually. Most of these are peer-to-peer payments used to split common expenses like food, rent, and utilities.

“Digital payments have gone from novelty to necessity and our oversight must reflect this reality,” CFPB Director Rohit Chopra said in December. “The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.”

Another provision of the rule bars payment apps from denying services to customers based on their beliefs, a practice known as ideological debanking.

Prior to the rule, several payment apps had banned far-right activists for expressing offensive or inflammatory views. The CFPB rule clarified that financial institutions can only deny services based on illegal conduct, not speech.

The move to gut this part of the rule has created a schism between senate Republicans and some far-right activists. Conservative influencers Laura Loomer, who was banned from PayPal for anti-Muslim rhetoric, accused Republican lawmakers of “gaslighting” their voters.

“It’s pretty wild how Republican voters tolerate being gaslit and lied to by the GOP,” Loomer said on X. “We were told that debanking would not be tolerated in our Golden Age. But, today, every single Republican Senator with the exception of @HawleyMO voted to repeal a Consumer Financial Protection Bureau (CFPB) rule that bans debanking over political affiliation or ideology.”

To abolish the rule, the House of Representatives must approve the Senate’s measure. A House vote is expected in the coming weeks.