Rohit Chopra, having recently been confirmed and taken the reigns as director of the Consumer Financial Protection Bureau (CFPB), told a Capitol Hill hearing Wednesday (Oct. 27) that Big Tech firms need greater scrutiny as they have a growing presence within financial services.
Read more: Senate Narrowly Confirms Rohit Chopra as Consumer Watchdog Boss
At the hearing before the U.S. House of Representatives’ Committee on Financial Services, titled “Bringing Consumer Protection Back: A Semi-Annual Review of the Consumer Financial Protection Bureau,” Chopra said the CFPB must keep a watch for “the obstacles small local financial institutions face when seeking to challenge dominant incumbents, including in Big Tech.”
Delving into the testimony, Chopra said that several macro-economic indicators have been positive. Labor demand has been strong, he said, and employers have added millions of new jobs.
“Household spending has rapidly increased, and demand for housing is robust,” said Chopra.
Yet the recovery has been uneven, he said, noting that many individuals and families are still struggling to make their rent and mortgage payments. Many smaller firms are also struggling, he said.
With a nod toward indebtedness, he said families in the U.S. owed $15 trillion at the end of the second quarter of this year, which represents $800 million more than the levels seen at the same point in 2019. Though delinquencies have been kept low as a result of the CARES Act, said Chopra, various forbearance programs have expired.
“So we lack a complete picture about distress,” Chopra said in his testimony.
At a broader level, eyeing the credit landscape as a whole, Chopra said that “technological progress holds the potential for enormous benefits to households and the economy, particularly with respect to real-time consumer payments.”
Looking for ‘Greater Control’
He noted that the desire of Big Tech to gain “greater control” over money flows raises several questions:
“How will these firms harvest and monetize data they collect on our transactions? What criteria will they use to decide who is removed from the platform? How will they ensure that payment systems adhere to consumer protections? Will Big Tech giants have an incentive to impede the entry of new firms seeking to offer competitive products and services?” he asked.
He recounted that the bureau has issued orders to firms such as Facebook, Apple, Amazon, PayPal and others to answer those questions.
“We will also be studying some of the practices of Chinese tech giants, including services provided by WeChat Pay and AliPay,” said Chopra.
Elsewhere, and with a focus on data access and the Biden executive order on data portability, he said during question-and-answer sessions with representatives, “I am interested in making sure that consumers are not trapped or stuck with a product that they don’t want. They can switch … into other opportunities. Competition is something that every agency, including the CFPB, should promote.”
Asked whether a bank should be mandated to comply with a consumer request to transfer data to a competitor, Chopra said, “people need to control their personal data. I am uncomfortable with the ‘surveillance style system’ that we have seen, not just in China but also here, where companies are collecting all sorts of highly detailed information … sometimes without our consent and sometimes without our knowledge.”
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