Washington, D.C. — The Bank Policy Institute responded today to a Consumer Financial Protection Bureau request for comment issued following a series of orders calling on Big Tech companies that offer payments services to provide information on how collected financial data is used, and whether that data is adequately protected under existing business practices. The orders recognize that while Big Tech companies are eager to push the envelope and expand their product offerings, these activities could threaten consumers and a competitive marketplace if left unchecked.
“Consumers and the broader economy benefit when market participants innovate to improve payments and other financial activities, provided that this innovation is conducted responsibly with consistent consumer protections in place,” stated BPI Senior Vice President and Associate General Counsel Paige Pidano Paridon. “When a consumer opens their favorite app or looks at their account balance, regardless of whether a technology company is involved in offering that product, there should be zero question about whether robust consumer protections are in place or whether their financial data is protected.”
While innovation is pivotal to the strength of the U.S. economy, any company operating in this space must provide appropriate and consistent consumer protections. BPI’s comment letter encourages the CFPB to coordinate with other regulators and policymakers to ensure Big Tech operators are subject to a comprehensive regulatory and supervisory framework to ensure the safety and soundness of the financial system. The letter outlines several key principles that the CFPB should consider:
- Subject tech companies to consistent regulation and oversight to ensure compliance with the full range of consumer protection laws and regulations. This includes fair lending laws (e.g., the Equal Credit Opportunity Act), laws prohibiting Unfair, Deceptive or Abusive Acts or Practices, anti-steering requirements and the Electronic Funds Transfer Act.
- Mandate that tech companies implement strong security and consent protections for consumer data, just as banks do. Consumers should be offered the right to opt out of certain data sharing, and both Big Tech and their third-party affiliates should be required to obtain informed consent to access, use or share consumer data.
- Establish regular, direct supervision of tech companies offering financial products or services. Tech companies operating payments platforms offer services and products in direct competition with banks, yet they are not subject to the same type of regular, direct supervision that promotes accountability and helps ensure compliance with consumer protection requirements. Further, tech companies are not subject to consolidated supervision at the parent company level, which means risks could develop in parts of the organization outside of the view of supervisors that could lead to consumer harm or harm to the financial system.
- Preserve consumer and merchant choice. The scale of some large platforms could pressure merchants to participate, which could lead to an environment that limits choice, restricts access to certain product functionalities that could disadvantage competitors or offers service access under less favorable terms. Additionally, many tech companies “self-preference” financial services products on devices, defaulting to their own products over competitors’ that might be better suited for the consumer.
To learn more about tech companies’ entry into financial services and the potential risks to consumers and the financial system resulting from this entry, please visit https://www.keepbankingsafe.com/.
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About Bank Policy Institute.
The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.
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