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CFPB goes after Big Tech data-harvesting practices with new orders

The Consumer Financial Protection Bureau headquarters in Washington, seen in 2019. (Andrew Harrer/Bloomberg News)

The Consumer Financial Protection Bureau has ordered six major U.S. tech companies to turn over information about how they harvest and profit from their users’ payment data, signaling an aggressive approach to oversight of the financial technology industry by the federal government’s foremost consumer watchdog.

The requests cover information related to how companies harvest and monetize data, including whether they share information with data brokers and whether they use consumer data for behavioral targeting. The watchdog also seeks information on ways that companies try to undercut competitors by restricting users’ choices. The requests were sent to Amazon, Apple, Facebook, Google, PayPal and Square, and the CFPB said it will also study the Chinese payments companies Alipay and WeChat Pay.

The orders represent one of the first major policy actions under the agency’s newly confirmed director, Rohit Chopra, who spearheaded the Federal Trade Commission’s efforts to regulate Big Tech in his previous role as federal trade commissioner. They suggest that the CFPB — better known for going after banks and debt servicers — could play a front-seat role in the Biden administration’s broader plans to regulate Big Tech.

“The CFPB’s inquiries will help inform regulators and policymakers about the future of our payments system,” Chopra said in a statement. He later added that the inquiries build on work by the FTC to “shed light on the business practices of the largest technology companies in the world.”

A representative for the Electronic Transactions Association, a trade group, said the digital transactions industry is deeply committed to protecting consumer data and using technology to stamp out fraud.

“The digital transactions industry has a good story to tell about its efforts to protect consumer data,” said ETA chief executive Jodie Kelley. “We look forward to working with Director Chopra and the CFPB on this important effort.”

The “market-monitoring” orders allow the CFPB to demand information from private companies under its purview. The open-ended information requests can sometimes precede related enforcement actions or new rules.

The Consumer Bankers Association, a trade group, said it welcomes the CFPB’s efforts to “level the playing field” between traditional banks and online payments processors. Banking industry representatives argue that Big Tech firms have built their e-commerce businesses with few rules in place to protect consumers.

“Since the bureau was founded, a growing share of banking activity has occurred outside of the purview of leading regulators, putting consumers and the resiliency of the financial system at risk,” CBA President Richard Hunt said in a statement.