Living up to his reputation, Rohit Chopra is giving the teeth back to the Consumer Financial Protection Bureau (CFPB) as he launches an inquiry into bigtech payment platforms.
Last Thursday (October 21), the CFPB issued a series of orders to collect information on the business practices of large technology companies operating payments systems in the United States.
The orders ask Google, Apple, Facebook, Amazon, Square, and PayPal to provide information about their products, plans and practices relating to payments, but Chopra noted that the CFPB will also study the practices of the Chinese technology giants WeChatPay and Alipay.
“Little is known publicly about how bigtech companies will exploit their payments platforms,” Chopra said in an accompanying statement. “The CFPB’s inquiry will help to inform regulators and policymakers about the future of our payments system.”
He also revealed that the CFPB may rely on the information gathered through this inquiry to help inform its long-awaited open banking rulemaking.
The U.S. has been far behind Europe in adopting a legal framework that helps bolster open banking. Currently, fintechs have to strike bilateral agreements with banks to carry out businesses in the U.S. The open banking framework would allow consumers to direct their banks to share their information with innovative financial service providers.
The inquiry represents a significant shift from the previous practices of the CFPB, whose enforcement actions saw a steep fall during the Trump administration.
The CFPB was set up by the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010, a response to the financial crisis, to implement and enforce federal consumer financial laws, and to ensure fairness, transparency, and competitiveness in consumer financial services markets.
But its activities were significantly curtailed during the Trump administration.
According to a report by the Consumer Federation of America, the CFPB did not announce or resolve a single case alleging unlawful discrimination and settled as many as three enforcement cases alleging deceptive practices. By contrast, during the Obama era, the CFPB closed 11 anti-discrimination cases, with an average consumer relief of more than $56m per case, and announced 116 enforcement cases against deceptive or misleading practices producing average consumer relief of more than $94m per case.
With the appointment of Rohit Chopra as the director of the CFPB, the tide seems to be turning again for the agency.
Chopra was part of the implementation team that worked on setting up the CFPB. He served as assistant director of the CFPB, and was appointed as the CFPB’s Student Loan Ombudsman, a new position established in the financial reform law.
He later joined the Federal Trade Commission (FTC) where he continuously spoke out against bigtech companies and pushed for stronger oversight of banks and other financial institutions.
His nomination by President Biden was sitting in Congress for more than seven months, facing serious criticism from GOP lawmakers.
“It is clear to me that Commissioner Chopra would very likely return the CFPB to the rogue, unaccountable, anti-business agency it was during the Obama administration. We have every reason to believe he would continue to disregard legitimate congressional oversight requests,“ Senate Banking Committee ranking member Pat Toomey (R-PA) said at the final vote.
In spite of the concerns, his nomination was confirmed by the Senate with a tight 50-48 vote on September 30.
Just a few weeks after his appointment, Chopra is already living up to his reputation as a thorn in the side of business or consumer champion, depending on which side of the aisle you sit, by announcing the inquiry into the bigtechs. Nonetheless, he is not alone in his crusade. Lina Khan, a vocal critic of bigtechs, has also recently been appointed to serve as the chair of the FTC. Last month, she named monopolistic practices, particularly in digital markets, as one of her agency’s key enforcement areas.