CFPB Requests Information On Payment System Plans And Practices Of Large Technology Companies – Finance and Banking – United States – Mondaq News…

11 November 2021

Cooley LLP

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The Consumer Financial Protection Bureau (CFPB) released astatement on October 21, 2021, announcing that it has ordered six of the largest US technologycompanies that operate payment systems to turn over informationabout their payments-related products, plans and practices. TheCFPB issued the orders to gain insight into how these firms usepersonal payments data (including with third parties), and toidentify how this data can potentially be used to limit consumerchoice and hinder innovation. On November5, 2021, the CFPBpublished a request inviting interested parties to submit comments to inform the agency'sinquiry no later than December6, 2021.

The CFPB asserts that the orders build on the efforts of theFederal Trade Commission to bring heightened scrutiny to some ofthe largest US technology companies. Specifically, the six ordersallegedly seek to illuminate the scale of these companies'consumer payment products, as well as the underlying businesspractices. In its statement, the CFPB described these as an"initial" set of orders, and it revealed that the agencyalso will be studying the payments practices of at least two largeChinese technology companies.

The comprehensive nature of the inquiry is reflected in an example order that the CFPB made publiclyavailable. Broadly, the CFPB is seeking information related tothe data gathering practices of the six technology companies, butthe order also demonstrates that it is seeking informationregarding the specifics of how these companies are making decisionsbased on the user data they collect. Ultimately, the CFPB says, itintends to use this information to ensure that these companies aremaintaining adequate consumer protections.

The example order includes 55 questions, which generally fallwithin three primary categories:

More specifically, the CFPB asked each company to:

The CFPB stated that the orders were issued pursuant to Section1022(c)(4) of the Consumer Financial Protection Act. This sectionstates in relevant part that the CFPB has "the authority togather information from time to time regarding the organization,business conduct, markets, and activities of covered persons andservice providers."1 The CFPB may gather thisinformation in a number of ways, including by requiring coveredpersons to supply "answers in writing to specificquestions."2 Through this authority, the CFPBargues that it will be able to obtain information from technologycompanies that will enable the agency to monitor risks to consumersand to publish aggregated findings that are in the publicinterest.

Under the Biden administration, the CFPB has taken a more activerole in enforcing consumer protections, and many expected thistrend to continue once the Senate confirmed Rohit Chopra asdirector of the agency in September. Following the issuance of thesix orders, it is clear that the CFPB plans to use its broadmonitoring authority to gather information on companies outside ofthe agency's traditional purview. As Chopra remarked in the director's statement on the inquiry, theCFPB hopes that such orders "will yield insights that may helpthe CFPB to implement other statutory responsibilities, includingany potential rulemaking under Section 1033 of the Dodd-Frank WallStreet Reform and Consumer Protection Act." In November 2020,the CFPB issued an advance notice of proposed rulemaking onSection 1033, which provides for consumer rights to accessfinancial records.

But further, this announcement is one of several recentstatements signaling that Chopra is keyed on large technologycompanies. In written testimony before the House Committee onFinancial Services on October28, 2021, Chopra again notedthe influence of "Big Tech" companies in the paymentsspace, which he contended "have sought to gain greater controlover the flow of money in our economy." So, while it remainsto be seen how insight gained from the companies' responses tothese orders will shape CFPB rulemaking or enforcement activities,Chopra seems to be positioning the CFPB as another Big Techwatchdog.

Law clerk James Dionne contributed to thisalert.

Footnotes

12 U.S.C. 5512(c)(4)(A).

Id. 5512(c)(4)(B)(ii).

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