US Watchdog Questions Tech Giants On Electronic Payments

The American consumer protection watchdog has signalled its interest in the electronic payment systems belonging to big name tech firms.

According to its press release on the matter, the Consumer Financial Protection Bureau (CFPB) has issued a series of orders to gather data “on the business practices of large technology companies operating payments systems in the United States.”

Specifically, the CFPB sent its orders to Amazon, Apple, Facebook, Google, PayPal, and Square, but the watchdog has also signalled it will be studying the payment system practices of Chinese tech giants including Alipay and WeChat Pay.

Payment systems

These orders from the CFPB will allow it to assess whether these systems utilise any form of “data surveillance, access restrictions, and other consumer protection risks as payments technologies and markets evolve.”

The CFPB also wants to “better understand how these firms use personal payments data and manage data access to users so the Bureau can ensure adequate consumer protection.”

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

The orders are issued pursuant to Section 1022 of the Consumer Financial Protection Act.

The CFPB said it has the statutory authority to order participants in the payments market to turn over information to help the Bureau monitor for risks to consumers and to publish aggregated findings that are in the public interest.

The CFPB’s work is one of many efforts within the Federal Reserve System to make payments safer, faster, and more competitive.

The data gathering comes as online commerce continues to become the accepted payment norm for many people, driven especially during the past 20 months of the Coronavirus pandemic.

Indeed, this need for electronic payments has seen companies develop new products and business models to meet this demand.

Data harvesting?

But the American watchdog is concerned that these changes present new risks to consumers, and cites the example of tech giants such as Apple and Google integrating payments services into their operating systems.

Earlier this week Samsung Electronics was banned from importing and selling 61 models of smartphones in Russia over an intellectual property lawsuit pertaining to its Samsung Pay system.

The CFPB said that it’s orders build on the efforts of the Federal Trade Commission’s work to shed light on the business practices of the largest technology companies in the world.

The CFPB is seeking to compel information on data harvesting and monetisation; access restrictions and user choice; and other consumer protections.