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CFPB and EU Eye Consumer Risks of BNPL, AI and Digital Payments


Consumer protection officials for the United States and the European Commission have met to discuss three shared priorities: buy now, pay later (BNPL), digital payments and artificial intelligence (AI).

The three meetings followed a July 2023 announcement by U.S. Consumer Financial Protection Bureau (CFPB) and the European Commission that they would start an informal dialogue on a range of consumer financial protection issues, the organizations said in a Thursday (April 11) joint statement.

“These discussions have strengthened the ability of our agencies to execute our respective public mandates,” Rohit Chopra, director of the CFPB, and Didier Reynders, commissioner for justice and consumer protection of the European Commission, said in the statement.

During a staff-level session on BNPL and over-indebtedness, the two organizations discussed consumers’ increasing over-indebtedness; the expected growth of the BNPL industry; and the consumer risks identified, the legal frameworks in place and the future planned work regarding the BNPL industry, according to the statement.

In a session covering digital payments access and fraud, as well as the involvement of Big Tech companies in consumer finance, the CFPB and the EC discussed current and proposed regulation concerning open banking and digital payments fraud; the role of nonbanks in payments; the impact of digital access on the unbanked; and efforts to address risks associated with Big Tech’s role in consumer finance, the statement said.

On the topic of AI, the two organizations’ staff discussed legislation and regulation addressing AI; automated decision-making applied by a leading German credit-scoring company; risks related to discrimination; and efforts to bolster internal technical expertise on AI and other issues, per the statement.

“Together, we can help ensure that consumers across the Atlantic have their financial data and privacy respected, not surveilled and misused; retain meaningful choices in competitive consumer finance markets; avoid fraud and manipulation; and have the tools necessary to get recourse when something goes wrong,” Chopra and Reynders said in the statement. “We look forward to continuing this dialogue.”

When announcing in July 2023 that they had begun this “informal dialogue,” Chopra and Reynders said that pricing, customer service, competition and privacy could all be affected by the digitalization of the financial services sector.