The Consumer Financial Protection Bureau has been a flashpoint in partisan politics and a focus of Wall Street's ire since its inception a decade ago. Now the watchdog, which was created in the wake of the 2008 financial crisis to protect Americans from fraud and other abuses, has a new target: Big Tech.
Less than two months into his tenure as CFPB director, Rohit Chopra, who was formerly with the Federal Trade Commission, is laying the groundwork for greater scrutiny of Amazon.com, Apple, Facebook parent Meta Platforms, Google parent Alphabet, and other technology giants. The industry has been moving into consumer payments and other businesses traditionally dominated by banks and other financial-services companies.
Politically, Chopra is making a safe bet. Big Tech is a popular villain in Washington among Democrats and Republicans alike. And his record of taking on big business in antitrust fights at the FTC makes him a viable threat to Silicon Valley's finance ambitions. At the CFPB, Chopra has significant authority to pursue lawsuits and write new rules. "We cannot have a two-tier system where financial institutions have to play by the rules, [and] where Facebook and other tech companies using mysterious black-box algorithms get to skate off with no accountability," Chopra said on Oct. 28 in his first testimony as CFPB director before the Senate Banking Committee.
The CFPB was sidelined by the Trump administration. For a while it was essentially led part time by Mick Mulvaney, who was also the White House budget director and a longtime critic of the agency. Enforcement actions were scaled back. Now progressive Democrats and consumer advocates are looking to Chopra-a protege of Senator Elizabeth Warren, who helped conceive the agency-to make the regulator relevant again.
Chopra faces limits in policing individual tech companies, which haven't been subject to supervision the way banks are. Silicon Valley is likely to resist his efforts, as are financial industry lobbyists. Republicans opposed to stricter financial regulation are already raising concerns about the agency overreaching its authority. "For as long as Rohit is in that chair, I don't think he's going to be able to walk across the street and get a cup of coffee without getting pushback," says Isaac Boltansky, director of policy research at the brokerage BTIG LLC. "It's just a question of how much that pushback impacts his policymaking priorities, and my sense is that it is unlikely to deter him in his focus."
Chopra has said he's keen to target the largest players causing the most harm throughout all of consumer finance, including credit reporting companies, student loan providers, payday lenders, and mortgage servicers. Banks won't be off the hook either: On Dec. 1 he announced that he intended to take action against overdraft fees that the bureau finds to be unlawful and exploitative.
Clamping down on tech is nothing new for Chopra, who's doing his second stint at the CFPB after serving as its first student loan ombudsman during the Obama administration. In 2018 he took a seat on the FTC, which often had Silicon Valley in its crosshairs. In one case, he argued that the agency's record-breaking $5 billion fine on Facebook for allegedly deceiving its users about how it used their private information wasn't enough. In another, he said Amazon.com Inc. "misled" and tried to "conceal its theft" after the company paid $62 million to settle allegations that it withheld tips from drivers. Both companies settled with the FTC without admitting wrongdoing; Amazon also said it had been clear about how its tipping system worked.
In his first weeks at the CFPB, Chopra launched a probe into Apple, Amazon, Facebook, Google, Square, and PayPal to glean information about their plans to offer more financial products and services. "The CFPB has never directed this kind of attention to Big Tech," says Rory Van Loo, a law professor at Boston University who previously worked at the bureau. "These actions are unprecedented."
Chopra's concerns include systemic risks posed by tech companies that plan to issue digital currencies and tokens, how they're sharing and profiting from consumers' payment data, and whether they're adequately safeguarding people's financial information. He's also said he's alarmed by how various firms use algorithms to make lending decisions that could be discriminatory and the way companies collect and use information about consumers. "We hope that the results of the inquiry will demonstrate that our industry is highly competitive and will reaffirm how regulated the payments industry is," says Scott Talbott, a spokesman for the Electronic Transactions Association, whose members include tech companies and banks.
Democratic lawmakers are also pressing the CFPB to supervise the fast-growing buy-now, pay-later market. The digital service allows customers to split payments into installments, often interest-free. Earlier this year, Square Inc. announced plans to acquire a leading player, Afterpay Ltd., for $29 billion. (Square is renaming itself Block.) PayPal Holdings Inc. offers its own product, while Apple Inc. has announced plans to develop a rival offering in partnership with Goldman Sachs Group Inc. Consumer advocates worry the product could cause Americans to overextend their means and descend into debt.
Chopra has indicated he may change the requirements for how financial companies share customers' records, which could result in people getting more control over their information. He has advocated for banks to use an open infrastructure so that switching service providers or using third-party financial apps is simpler. That technology would give consumers "the power to more easily fire poor-performing banks," Chopra said in his remarks on overdraft charges.
He's hiring data analysts, lawyers, and economists. Notably, he's tapped Erie Meyer as the agency's first chief technologist. Previously, Meyer was an adviser to Chopra at the FTC, where she worked with him to find talent with technology-related skills.
Van Loo, the law professor and CFPB alum, says the stakes of the fight over the agency's reach are high for tech companies and consumers. "The CFPB could all of a sudden have a link to opening the black box of what Big Tech is doing," he says.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
