CFPB Pulls Plug on Google Payment Oversight; Alphabet to Withdraw Lawsuit

The Consumer Financial Protection Bureau (CFPB) has abruptly abandoned its effort to supervise Google Payment, unraveling a marquee Biden-era bid to extend the agency’s reach into Silicon Valley and lifting a potential compliance burden from parent company Alphabet. The policy U-turn surfaced in a Wednesday (May 7) internal memorandum obtained by Bloomberg News.

Acting CFPB Director Russell Vought said in the memo that continuing to monitor Google’s payments arm would be “an unwarranted use of the Bureau’s powers and resources.”

His decision rescinds a December 2024 order issued by then-Director Rohit Chopra that had subjected the unit to the same type of routine examinations banks face. The CFPB said in its initial press release that it is responsible for supervising a wide range of financial firms, including nonbank entities, to ensure they are complying with federal consumer financial protection laws; that it must issue a notice to an entity not currently subject to a supervisory examination; and that the entity can either consent to supervision or contest the notice.

As PYMNTS reported at that time, “To justify its oversight, the CFPB would need to establish that Google’s financial operations present a substantial risk to consumers. This could align with recent efforts within the agency to implement broader regulatory standards across tech giants that offer financial services. Hundreds of consumer complaints regarding issues like unauthorized charges in Google’s payment services have been documented by the CFPB in recent years, signaling potential consumer risk.”

Google quietly shuttered the wallet feature at the center of the dispute last June. Even so, the company sued the CFPB in February, arguing the watchdog lacked authority to treat it like a bank. Following Wednesday’s reversal, Google will withdraw that lawsuit, spokesman Jose Castaneda said.

At the time of the lawsuit Castaneda told PYMNTS, “This is a clear case of government overreach involving Google Pay peer-to-peer payments, which never raised risks and is no longer provided in the U.S., and we are challenging it in court.”

The spokesperson changed his tune after the CFPB memo was publicized. “It didn’t make sense for the CFPB to supervise a product that never posed any risks and is no longer available in the U.S.,” Castaneda said in a statement emailed to Bloomberg. “We appreciate their common-sense decision to drop this issue.”

The retreat underscores how swiftly the bureau’s priorities have shifted since Chopra’s departure. Under the prior leadership, the agency aggressively targeted nonbank payment platforms and digital wallets, launching supervisory sweeps and enforcement actions. Vought has signaled a preference for focusing resources on traditional banks, and several pending FinTech cases have already been shelved.

Industry lawyers told Bloomberg said the Google decision could embolden other technology firms to challenge oversight efforts begun during the previous administration, although the CFPB retains enforcement authority over unfair or deceptive practices. The bureau declined to comment on the memo or the lawsuit’s dismissal. Alphabet shares were little changed in afternoon trading.