CFPB Pauses Supervision Order, Signals Potential Rescission

On February 8, the CFPB requested a 90 day stay in a lawsuit filed by a major tech company challenging the agency's risk-based supervision order. The lawsuit, filed in the U.S. District Court for the District of Columbia, contests an order issued in late 2024 by former CFPB Director Rohit Chopra that would subject the tech company's payment services activities to the Bureau's supervisory oversight. The CFPB's request was granted on February 9, pausing litigation until May.

The December 2024 supervision order (which we previously discussed here) designated the nonbank financial services provider for risk-based supervision, citing potential risks related to digital payment transactions. As part of its oversight order, the CFPB expressed concerns in connection with how the entity handled user-reported payment errors and fraud claims. In response, the entity challenged the order, arguing that the CFPB cannot assert supervisory authority over a discontinued product