Rohit Chopra, the Director of the Consumer Financial Protection Bureau (CFPB) will visit with the House Committee on Financial Services tomorrow (April 27) for the semi-annual report on the CFPB.
Included in the Hearing Memo, among other items, is the topic of “Responding to Emerging Technologies” – or Fintech.
According to the memo:
“During the reporting period, the CFPB conducted its first examination of machine learning-based loan underwriting and origination. In the fall of 2021, the CFPB issued two sets of orders pursuant to Section 1022(c)(4) of the Consumer Financial Protection Act, to collect information on the business practices of large technology companies operating payments systems in the United States, and to five companies offering “buy now, pay later” (BNPL) credit. On October 21, 2021, the CFPB’s orders sought information on how large technology companies collect and use data; to understand those companies’ policies on access restrictions and how they affect the choices available to businesses and consumers; and to understand how payment platforms prioritize consumer protections under laws such as the Electronic Fund Transfer Act (EFTA) and the Gramm-Leach-Bliley Act (GLBA). In November 2021, the CFPB also issued an RFI seeking public input on those technology companies, which closed in December 2021. On December 16, 2021, CFPB issued orders to seek information about debt accumulation associated with use of BNPL credit, regulatory arbitrage, and data harvesting in a changing consumer credit market, and relatedly, in January 2022, the CFPB issued an RFI seeking public input on the BNPL market, how consumers interact with those providers, and how current business models impact the broader marketplace and operating payments systems, which closed in March 2022.”
The prepared statement by Chopra states:
“Currently, the United States is lurching toward a consolidated market structure where finance and commerce co-mingle fueled by uncontrolled flows of consumer data. This is the market structure that has emerged in China, where Alipay (operated by Ant Group, formerly known as Alibaba) and WeChatPay (operated by Tencent) predominate. Alipay is part of the same conglomerate that dominates e-commerce, and WeChatPay is connected to the dominant messaging app.”
These statements probably only foreshadow broader topics regarding the interaction of technology and financial services, something the CFPB appears to view (at times) with concern. Just recently, the CFPB declared its intent to “examine” nonbank firms that “pose risks to consumers.”
The hearing will take place at 10AM ET and will be live-streamed on the Committee’s website.