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In a number of wide-ranging interviews, Consumer Financial Protection Bureau (CFPB) chief Rohit Chopra has told newswires his crusade is not yet over against lawbreaking big firms and that his agency may rein in bigtech, surging mobile wallet fraud and crypto.
In a interview with the American Banker, Chopra has said the CFPB “will be litigating”.
Since last October, the CFPB has speeded up work at the agency both in terms of enforcement and rulemaking activity.
In March, Chopra announced that his agency will focus on repeat offenders, especially on big firms that have repeatedly broken the law.
His statement was quickly followed by two enforcement actions against MoneyGram and TransUnion, both of which fell into this category, according to the agency.
Chopra told the American Banker that his approach was shaped by his tenure at the Federal Trade Commission (FTC), where he said commissioners saw their role “as strong-arming small firms into settlements in the hope that larger companies would get the message and change their ways”.
“But that often didn’t happen,” Chopra said.
“I think it's important that the agency really be willing to prove its case in court,” he added.
Although he said his agency is still willing to resolve matters through settlements, he noted that “I do believe that we will be litigating perhaps more than others have been willing to”.
Laser-focus on bigtech
Chopra also told the American Banker that he has been “laser-focused on the financial products and services offered by bigtech giants”.
He expressed concerns about Google Pay, Apple Pay and others having connections to the existing banking rails, especially where there is a credit card or debit card number involved.
“What happens when that moves outside of the banking rails and what is the implication for the banking system of that?,” Chopra wondered.
In a separate interview with the Financial Times, the CFPB director pointed out that Apple may combine this data with browsing history, geolocation history, health data and other apps.
He is looking at Apple’s announcement to enter the buy now, pay later (BNPL) arena with caution, suggesting that the move "may actually reduce competition and innovation in the market".
The agency plans to release a report on its ongoing inquiry into the BNPL sector this fall, Chopra told Reuters.
Surging mobile wallet fraud
Earlier this year, payment fraud on mobile wallet solutions, such as Zelle and Venmo, hit the headlines following a New York Times article that revealed that fraud victims are typically left without any recourse to get their money back.
The report started a wave of class action lawsuits, whereby Zelle users accused their banks of marketing Zelle as a secure way to make money transfers despite the fact that Zelle does not provide any protections for victims of fraud.
The news even got to Congress, prompting Democratic Senators Elizabeth Warren (D-MA), a mentor to Chopra, and Robert Menendez (D-NJ) to send a list of questions to Zelle owner banks about their efforts aimed at rooting out scams.
Commenting on the issue, Chopra said: “We are trying to look at this holistically beyond one single app about what really can be done both by consumers, the industry and policymakers to really rein some of this in.”
Last week, Chopra told the Wall Street Journal that his agency is preparing guidance for banks with heightened requirements around these scams.
The guidance will be published in the “coming weeks”, according to the newswire.
Crypto too
Although the federal securities and commodities regulators have been particularly active in cracking down on cryptocurrency businesses, the CFPB has so far not taken an active role in overseeing crypto firms.
Last November, the agency said it is actively monitoring and preparing for broader consumer adoption of cryptocurrencies.
It warned that stablecoins may fall under consumer financial protection laws when they are used in connection with consumer deposits, stored value instruments, retail and other consumer payments mechanisms, and consumer credit arrangements.
In these cases, the CFPB may investigate and enforce the prohibition on unfair, deceptive, or abusive acts or practices against crypto firms.
In a separate interview given to Reuters, Chopra reiterated that the sector would be a “heavy” focus for the agency if there was widespread adoption of cryptocurrencies for real-time payments.
His agency is concerned about the risks of hacks, errors, fraud and bigtech entry into the stablecoin market.
