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Google has filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) objecting to its supervision of Google Pay — a product that no longer exists in the US market.
On Friday (December 6), Google filed a complaint that calls for the reversal of a CFPB supervision designation that was announced publicly on the same day.
The CFPB’s supervision order designates Google Pay Corporation (Google) as a covered person under the Consumer Financial Protection Act.
The bureau imposed this designation after finding that Google’s conduct “poses risks to consumers with regard to the offering or provision of consumer financial products or services”.
The designation does not mean that Google has violated any laws or regulations, only that it meets the threshold, according to the CFPB, for supervision based on perceived risk to consumers.
Google disagrees with the CFPB’s decision on a number of grounds, not least the fact that Google Pay has not been offered in the US since June this year.
“Congress did not authorize the CFPB to designate a company for ongoing supervision based on a product it no longer offers,” the tech giant said.
“Congress intended the CFPB’s risk-based supervision authority as a mechanism to address current or future risks to consumers — which are not present, or even possible, here.
“As a matter of common sense, a product that no longer exists is incapable of posing such risks.”
The CFPB began its proceedings to designate Google in March 2023, and was informed by Google that the peer-to-peer (P2P) product had been retired in June 2024.
Nonetheless, the CFPB has addressed this argument, claiming that supervision is warranted as long as there is past evidence of consumer risk.
The justification for the supervision order still stands, the agency said, “regardless of what products [an entity] presently offers” and even when there is no “possibility of harm in the future”.
Thin evidence of consumer risk, says Google
Putting the timing of the order aside, Google has also objected to the CFPB’s purported evidence of consumer risk associated with Google Pay.
According to Google, the CFPB’s justification for the order is based “entirely” on allegations from a small number of “unsubstantiated” complaints.
“Under any reasonable standard, the CFPB failed to provide sufficient evidence that Google Pay Corporation ever posed ‘risks to consumers’,” the company said.
“The CFPB based its decision on just 26 cherry-picked and unverified complaints regarding the now-retired P2P product across a three-year period.
“This is an infinitesimally small number of complaints in comparison to ‘millions of payment transactions’ the CFPB concluded the product facilitated during that same time period.”
The CFPB made “no effort” to determine whether the number of complaints was significant or material in light of the number of transactions processed, Google added.
The company also said that the bureau disregarded evidence provided by Google showing why none of the complaints demonstrated “risk to consumers”.
According to Google, some of the complaints were found to be mistaken, and some were never followed up on by the complainant, even after being contacted by the company for more information.
The CFPB is also accused of “giving no weight” to Google’s ongoing compliance programme, its oversight and examination by state regulators, or a report from a consulting firm attesting to Google's “appropriate” complaints investigation procedures.
What does CFPB supervision entail?
Although Google is already subject to the CFPB’s enforcement jurisdiction, the supervision designation allows the agency to conduct supervisory exams over covered persons.
As described by the CFPB, supervisory exams are confidential processes that help companies identify and rectify potential violations of law.
These exams include on-site visits and requests for confidential documents and other information.
Google has described CFPB supervision as a “burdensome” form of regulation that is usually imposed through “coercive” measures.
The "coercion" referred to by Google is the CFPB custom of keeping its supervision designations confidential, unless the entity in question contests the designation, in which case, the CFPB makes it public.
This is partly why, as noted by the CFPB, “most” entities that are informed of an incoming designation decide to consent to supervision.
In Google’s case, the big tech company objects not only to this practice, but also to the leaking of Google’s designation to the media before the CFPB made it public.
On information and belief, Google alleges that the leak came from the CFPB itself.
This meant that Google was unable to protest its innocence publicly until last week, when the CFPB officially made the designation public.
Google’s challenge seeks to vacate the designation, find the CFPB liable for exceeding its authority and recoup legal costs incurred by Google's complaint.
