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Tech group unveils litigation center with CFPB suit

Tech group unveils litigation center with CFPB suit

A tech trade group is launching a new vehicle for the industry’s litigation efforts with a lawsuit challenging the Consumer Financial Protection Bureau’s recent regulation on larger tech companies.

The new TechNet initiative will “advance the interests of American innovation in the courts and the broader legal community” with lawsuits, according to an announcement shared first with Punchbowl News.

TechNet’s litigation operation, known as the Innovation Legal Center, is the latest industry effort to go on the policy offensive in court. For tech, it’s become an increasingly effective tactic.

ILC’s first foray will be a challenge to the CFPB’s rule on large nonbank payment companies in federal court. That regulation, finalized in November, placed payment apps and digital wallets under the bureau’s supervisory authority.

TechNet’s been leading opposition to the rule, saying it violated both the Dodd-Frank Act and Administrative Procedure Act. Among its members, TechNet counts Big Tech firms that have payment apps, gig companies that process payments and e-commerce players.

“Under this rule, a company offering digital payment services could find itself subjected to wide-ranging scrutiny over its tax payments or completely unrelated product lines,” Carl Holshouser, TechNet’s executive vice president, said in a statement. Holshouser will be leading ILC.

While the incoming Trump administration is unlikely to favor the CFPB rule, undoing it at the bureau or through congressional disapproval will be time-consuming, particularly with the competing priorities of a changeover in power.

TechNet is also hoping that a favorable ruling from a judge could make it tougher for CFPB to turn its eye to tech in the future, according to people familiar with the matter.

NetChoice, another tech trade group that’s allied with conservatives, has become something of a fixture at the Supreme Court with its focus on speech issues. The group, which is a co-plaintiff on TechNet’s CFPB lawsuit, recently succeeded in its challenges to state laws that tried to force ideological neutrality in social media content moderation.

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