Regulators must ensure that consumers have unencumbered access to their financial information.
President Trump has made affordability a central priority of his second term. Tax relief is putting more money back in the pockets of working Americans. The administration has attacked unnecessary regulations that raise the cost of housing, energy, and everyday goods. The aim is straightforward: reduce barriers, increase competition, and let consumers keep more of what they earn.
That is why recent reports about the Consumer Financial Protection Bureau’s (CFPB’s) forthcoming Section 1033 open-banking rule are so troubling.
According to recent reporting, the Consumer Financial Protection Bureau is considering allowing banks to impose volume-based fees, also known as data rationing, when consumers use third-party financial applications to access their own financial data. That would be a serious mistake.
Section 1033 of the Dodd-Frank Act is built on a simple principle: Consumers should have access to their financial information and the ability to authorize others to access it on their behalf. As I argued in comments submitted to the CFPB last year, open banking has the potential to transform financial services by giving consumers greater control over their data and creating a more competitive marketplace.
Volume-based fees would turn that principle on its head. Consider how modern financial technology actually works. A budgeting application may need to regularly update a customer’s transaction history. A small-business accounting platform may synchronize account information throughout the day. A crypto platform may rely on secure data connections to verify accounts and facilitate transfers.
Under a volume-based fee regime, each of those connections becomes another opportunity for the consumer’s bank to collect a fee. Banks will insist these fees are charged to fintech companies or data aggregators, not consumers. Economically, that distinction is meaningless. Businesses do not absorb unlimited new regulatory costs out of charity. Those costs are subtly reflected in subscription prices, transaction fees, reduced services, or fewer free products. In other words, a data-access fee is ultimately a consumer fee.
Worse, the largest banks would be allowed to impose those costs on their own competitors. Imagine if a dominant telecommunications company could charge competing applications every time a customer used the internet to access them. Or if a large retailer could charge a toll every time one of its customers visited a competitor’s website. We would immediately recognize the competitive problem.
A bad open-banking rule presents the same danger. Traditional banks control the infrastructure where consumer financial data reside. Fintech and crypto companies increasingly compete with those banks by offering lower-cost payments, budgeting tools, investment products, and other innovative services. Allowing incumbent banks to charge volume-based fees for access to consumer-authorized data risks transforming Section 1033 from a competition and consumer-choice statute into an incumbent-protection scheme. Especially because no such limits apply to your incumbent bank, which can and does mine that information without limit to offer new products and services on an uneven playing field.
That outcome would also run directly against President Trump’s stated affordability agenda. It makes little sense to deliver savings to consumers with one hand while allowing new financial tolls to emerge with the other.
There is also a significant legal problem, one that would almost certainly invite immediate litigation. Section 1033 states that covered financial institutions “shall make available” consumer financial information upon request. The statute does not say banks may condition that right on payment of a toll to the institution holding the data. The point of the statute is to encourage consumers to use their data to shop for better deals. Imposing a graduated toll on the most active users is the exact opposite of Congress’s intent.
The irony is hard to miss. The Trump administration rightly criticized the Biden CFPB for stretching ambiguous statutes to achieve preferred policy outcomes. A Republican CFPB should not repeat the same error simply to reach a result favored by large banks.
The CFPB has an opportunity to establish clear rules for secure, consumer-authorized data sharing. It should address legitimate questions involving privacy, security, and authorization. But those concerns do not justify allowing incumbent financial institutions to build tollbooths around data that belong to consumers. Volume-based tolls on third parties also risk freezing the potential for future pro-consumer innovations that might increase data usage. For example, “agetech” applications rely on changes in financial behavior to spot early signs of dementia. Artificial intelligence will only accelerate that trend in data usage, as tools emerge to flag likely fraud, automate savings, and personalize financial advice.
Competition lowers prices. Consumer choice drives innovation. Property rights matter. Section 1033 should reinforce those principles, not undermine them. The president’s affordability agenda is working to put consumers back in control of their economic lives. The CFPB should ensure that its open-banking rule does the same.