CFPB orders ‘Big Tech’ to turn over payment system plans

The Consumer Financial Protection Bureau (CFPB) issued a series of orders Thursday that will require large tech companies to hand over information on their payments systems to better understand how these firms manage and access users personal data.

“Big Tech companies are eagerly expanding their empires to gain greater control and insight into our spending habits,” said CFPB Director Rohit Chopra. “We have ordered them to produce information about their business plans and practices.”

Specifically, the orders will compel information on:

  • Data harvesting and monetization,
  • Access restrictions and user choice
  • and other consumer protections.

The orders voiced CFPB’s concern over how payment companies are actively sharing payment data across product lines and with data brokers and other third parties. In some cases, big tech companies may be using this data for behavioral targeting which the CFPB fears may not align with consumers’ expectations.

The CFPB also showed wariness of when payment systems gain scale and network effects, merchants and other partners feel “obligated to participate, and the risk increases that payment systems operators will limit consumer choice and stifle innovation by anticompetitively excluding certain businesses.” 

The initial orders were sent to Amazon, Apple, Facebook, Google, PayPal and Square. The Bureau said it will also be studying the payment system practices of Chinese tech giants, including Alipay and WeChat Pay.

There is no word yet of whether these orders will continue to trickle down to other companies; however, the Bureau did name Venmo and CashApp as payment platforms that are growing at a rate that could potentially be “risky” to families and businesses.

According to the CFPB, the orders build on the Federal Trade Commission’s work to shed light on the business practices of the largest technology companies in the world.

In a statement from Chopra, the Director acknowledged the benefits many of these companies have brought to consumer and businesses in terms of lower costs and accessibility; however, Chopra stated “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?” Chopra asked.

“Will these companies operate their payment platforms in a manner that interferes with the fair,
transparent, and competitive markets? Will the payment platforms be truly neutral, or will they
use their scale to extract rents from market participants?” Chopra continued.

The CFPB attached an example of its 17-page order handed down to these companies pursuant under the the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) for consumers to view – though it is labeled “generic” so it is likely these orders are more tailored to specific companies based on their platform and reach.

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