The CFPB has issued information request orders to BigTech giants including Amazon, Apple, Facebook, Google, PayPal, and Square, compelling the firms to answer questions about their payment system practices. According to the CFPB‘s release concerning the orders: “The information will help the CFPB better understand how these firms use personal payments data and manage data access to users so the Bureau can ensure adequate consumer protection.”
The CFPB has also asked consumers, small businesses and others for comments on its inquiry, which are due on December 6.
You can file a comment simply by sending the CFPB an email message to: [email protected]. Include Docket No. CFPB– 2021–0017 in the subject line of the message.
The CFPB is looking for information about the firms’ eponymous payment methods, such as Apple Pay, Amazon Pay and Google Pay. It wants information about the firms’ relationships with banks, including their network-branded credit and debit cards. It wants to know more about peer-to-peer (P2P) payment apps, including, for example, Paypal’s Venmo and Square’s Cash App.
A 17-page sample order asks how a company harvests, uses, monetizes and shares consumer information collected by its payment systems. The CFPB also wants to know how the firms handle consumer complaints.
Consumer tech reporter Bob Sullivan has written recently about scammers taking advantage of weak consumer protections in P2P apps including Zelle. U.S. PIRG’s June report “Virtual Wallets, Real Complaints” explained how the recent growth of P2P apps has resulted in a surge of complaints to the CFPB.
In a statement accompanying the information orders, CFPB director Rohit Chopra explains:
“Little is known publicly about how Big Tech companies will exploit their payments platforms. For example, will the operators engage in invasive financial surveillance and combine the data they collect on consumers with their geolocation and browsing data? Will they in turn use this data to deepen behavioral advertising, engage in price discrimination,or sell to third parties? Will these companies operate their payment platforms in a manner that interferes with fair, transparent, and competitive markets? Will the payment platforms be truly neutral, or will they use their scale to extract rents from market participants?”
The CFPB’s Big Tech inquiry comes at a time of rapid changes to payment systems. The CFPB was encouraged by President Biden’s executive order on competition to complete a rulemaking under Section 1033 of its 2010 enabling legislation to give consumers more opportunities to share their financial information with fintechs. (Coalition letter on Section 1033.) Also, the Federal Reserve is completing an inquiry into how to implement a real-time payments system. Our September comment expressed our concerns that any government-affilated payments system must include much better consumer protections. The Fed is also proposing to open up the Visa and Mastercard-controlled payments networks to more competition, saving merchants and consumers money.
U.S. PIRG has long been concerned with the virtually unregulated activities of Big Tech’s surveillance business model. The CFPB is right to investigate their forays into payments. We’ll certainly be filing comments. You should as well.
Senior Director, Federal Consumer Program, PIRG
Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.