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Greenville Business Magazine

The Business Narrative: Technology Oversight

Nov 17, 2023 11:07AM ● By Donna Walker

CFPB Proposes New Federal Oversight of Big Tech Companies, Other Providers of Digital Wallets, Payment Apps

The Consumer Financial Protection Bureau (CFPB) is proposing to supervise larger nonbank companies that offer services like digital wallets and payment apps.


Driven largely by Big Tech and other large technology firms, digital payment apps and wallets continue to grow in popularity, but many of the companies are not subject to CFPB supervisory examinations.


The proposed rule would ensure that these nonbank financial companies – specifically those larger companies handling more than 5 million transactions per year – adhere to the same rules as large banks, credit unions, and other financial institutions already supervised by the CFPB.


Digital applications now help millions of people to send money to friends and family, as well as to help them make a variety of consumer retail payment transactions.


CFPB officials say these digital applications have a share of ecommerce payments volume that is similar to or greater than traditional payment methods, such as credit cards and debit cards.


Such applications also have gained a significant volume of in-person retail spending.


Amid growing merchant acceptance of general-use digital consumer payment applications, consumers with middle and lower incomes use digital consumer payment applications for a share of their overall retail spending that rivals or exceeds their use of cash, according to CFPB officials.


However, complaints about these applications and the companies that run them have been rising in recent years, the officials say.


Big Tech and other companies operating in consumer finance markets blur the traditional lines that have separated banking and payments from commercial activities.


The CFPB has found that this blurring can put consumers at risk, especially when the same traditional banking safeguards, like deposit insurance, may not apply.


Despite their impact on consumer finance, Big Tech and other nonbank companies operating in the payments sphere don’t receive the same regulatory scrutiny and oversight as banks and credit unions, according to CFPB officials.


While the CFPB has enforcement authority over these companies, the CFPB hasn’t previously had, inside many of these firms, examiners carefully scrutinizing their activities to ensure they are following the law and monitoring their executives, the officials say.


The proposed rule would subject larger nonbank digital consumer payment companies to the CFPB’s authority to conduct examinations, helping to ensure consistent application of federal consumer financial laws across the marketplace.


Specifically, the proposed rule would help ensure these large nonbank companies:


Adhere to applicable funds transfer, privacy, and other consumer protection laws: The CFPB would be able to supervise larger participants for compliance with applicable federal consumer financial protection laws, which includes applicable protections against unfair, deceptive, and abusive acts and practices, rights of consumers transferring money, and privacy rights.


Play by the same rules as banks and credit unions: The CFPB’s supervision of these large companies can foster a level playing field with depository institutions. Greater supervision of nonbanks in this market would ensure federal consumer financial protection law is enforced consistently between non-depository and depository institutions in order to promote fair competition.


The proposed rule, if finalized, would be one part of the CFPB’s efforts to carefully monitor the entry of large technology firms, including Big Tech giants, into consumer financial markets.


In 2022, the CFPB warned Big Tech firms that they must adhere to federal consumer financial protection laws when using sophisticated behavioral targeting techniques to market financial products, and launched a public inquiry to gain more information on the risks posed by Big Tech’s payments platforms along with potential policy solutions.


In 2023, the CFPB followed up on a 2021 request to Big Tech companies for information on their payment system plans with more detailed orders to ascertain more information on their use of sensitive personal data, and highlighted the role of certain Big Tech firms in limiting competition and innovation in mobile payments.


In addition, the CFPB has opened the Office of Competition and Innovation to ensure nascent firms can compete with Big Tech companies within consumer finance, and established a supervision technology program staffed with technology experts and examiners focused on, among other things, risks associated with Big Tech consumer financial products.


The Consumer Financial Protection Act provides the CFPB with the authority to conduct supervisory examinations over all nonbank companies in the mortgage, payday loan, and private student loan industries, as well as those who serve as service providers to banks and credit unions.


In addition, the CFPB can supervise individual entities that pose a risk to consumers, as well as larger participants in other markets.


The proposed rule would be the sixth in a series of CFPB rulemakings to define larger participants operating in markets for consumer financial products and services that play a substantial role in consumers’ everyday lives.


The first five rules covered larger participants in consumer reportingconsumer debt collectionstudent loan servicinginternational money transfers, and automobile financing.


Comments must be received on or before Jan. 8, 2024, or 30 days after publication of the proposed rule in the Federal Register, whichever is later.

SCRA Announces New Member Companies, Grant Funding

CADchat and Saluda Manufacturing were accepted as South Carolina Research Authority Member Companies.


Borealis Global Advisory, DRAHOLA Technologies, FRD Accel, and Health Evolve Technologies received new grant funding.


All SCRA Member Companies receive coaching, access to experts in SCRA’s Resource Partner Network, eligibility to apply for grant funding, and the potential to be considered for investment from SCRA’s investment affiliate, SC Launch Inc.


Borealis Global Advisory LLC received a $50,000 Acceleration Grant. The Blythewood-based fintech startup is a SaaS platform that saves significant time and money for investment managers. The platform allows managers to invest globally by leveraging advanced algorithms and visualization tools that provide world-leading, real-time, and actionable country-level insights.


CADchat Inc. has been accepted as an SCRA Member Company. The Mount Pleasant-based information technology startup has designed a simple and secure 3D conferencing tool that enables designers, engineers, manufacturers, and non-technical stakeholders to communicate efficiently about 3D files through easy viewing, sharing, and video conferencing.


DRAHOLA Technologies Inc. received a $25,000 Project Development Fund Grant. The Rock Hill-based information technology startup is a full-service spatial software development and consulting company. DRAHOLA is the developer of yey’maps, a geospatial engineering company that uses flexible and intuitive cloud GIS solutions for the optimal implementation of geodata.


FRD Accel LLC received a $50,000 Federal Matching Grant. The Charleston-based life science company was formed by the Medical University of South Carolina’s Zucker Institute for Innovation CommercializationTheir technology, BabyStrong, consisting of an earpiece and controller, uses vagus nerve stimulation to promote feeding in newborns, especially premature babies, who are having feeding difficulties. The BabyStrong system can eliminate the need for a gastric tube, resulting in earlier discharge from the hospital and reduced stress for the baby and family.


Health Evolve Technologies LLC received a $25,000 Project Development Fund Grant. The Columbia-based information technology company builds patient-centered technologies that provide comprehensive and simple tools to position patients as partners and equip providers with clinical insights needed for a personalized care experience.


Saluda Manufacturing LLC has been accepted as an SCRA Member Company. The Columbia-based advanced materials and manufacturing company is changing the way truck owners manage cargo with the Saluda Box. The Saluda Box simplifies cargo management by merging a bed-mounted toolbox with a bed cover that protects bed cargo and is easily stored in the toolbox when not in use.


Grant funding is made possible, in part, by the Industry Partnership Fund (IPF) contributions that fuel the state’s innovation economy.


Contributors to the IPF receive a dollar-for-dollar state tax credit.

NRx Pharmaceuticals, Nephron Pharmaceuticals Announce Joint Agreement to Develop Intravenous Ketamine to Treat Suicidal Depression

NRx Pharmaceuticals, Inc. (Nasdaq: NRXP), a clinical-stage biopharmaceutical company and Nephron Pharmaceuticals, Inc., a leading manufacturer of sterile injectable drugs, announced the signing of a development and manufacturing agreement to manufacture a presentation of ketamine suitable for treating suicidal depression.


Recent CDC data suggest that more than 3 million Americans have active thoughts of suicide and more than 50,000 die from suicide each year.


Ketamine has increasingly been recognized as valuable for rapid reduction of suicidal thoughts as part of a comprehensive program of care and its use in depression has been endorsed as standard of care by both the U.S. Department of Defense and the Veterans Administration.


Officials say submission of a New Drug Application for ketamine depends upon both the availability of data demonstrating safety and efficacy from well-controlled trials and upon the submission of data for a manufactured product demonstrating adherence to Good Manufacturing Practices and long term stability, among other requirements.


Officials say the NRx/Nephron partnership intends to meet those requirements.


"There are few efforts as important as playing a role - through research and development - in tackling the nation's mental health crisis," said Lou Kennedy CEO and owner of Nephron Pharmaceuticals.


Kennedy added, "To this end, we are honored to partner with NRx Pharmaceuticals in a groundbreaking endeavor. Together, we are advancing the production of single-dose, intravenous Ketamine, which could be a crucial breakthrough for the treatment of depression. Not only are we addressing an immediate demand, but we are also laying the foundation for a potential New Drug Application, signifying a significant leap forward in the improvement of mental health outcomes for patients."

Myrtle Beach Area Chamber of Commerce Recognized As 2023 Outstanding Chamber of the Year

The Myrtle Beach Area Chamber of Commerce (MBACC) has received the prestigious 2023 Outstanding Chamber of the Year recognition from the Carolinas Association of Chamber of Commerce Executives (CACCE).


The Chamber was presented with the top honor at the association’s Annual Management Conference held Oct 18-20, 2023, in Summerville, S.C.


The association recognizes two chambers with the Chamber of the Year award each fall.


The Greater Cayce-West Columbia (S.C.) Chamber received the award among the chambers with less than 700 members, while Myrtle Beach Area Chamber received the award among chambers with over 700 members.


The 2023 Outstanding Chamber of the Year award evaluates chambers for their significant achievements during the past 18 months and recognizes those that showcase positive, measurable results in various aspects of their organization.


To qualify for the award, the Myrtle Beach Area Chamber submitted an 11-page application outlining some of its key achievements throughout 2022 and 2023.


Highlights included:


* Maintaining a five-star accreditation with U.S. Chamber of Commerce since 2010.

* Leading the nation in post-pandemic tourism recovery. 

* Establishing the Partnership Grand Strand community foundation.

*Launching a Keep America Beautiful-affiliate organization. 

* Creating new networking and educational events such as Ignite Women’s Conference.

* Updating membership structure to provide more added-value offerings.

* Hiring a director of Diversity, Equity and Inclusion and a Community Engagement manager. 

* Holding a 94 percent member retention rate.


Carolinas Association of Chamber of Commerce Executives (CACCE) is the professional development organization dedicated to providing educational opportunities for chamber of commerce executives and staff members in North Carolina and South Carolina.


The organization was formed in 1994 when the North Carolina and South Carolina state chamber associations merged.

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