Signage at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C. has a new development to report: the CFPB is ordering federal supervision of Google Payment Corp., Alphabet’s payment arm, citing consumer complaints and potential violations of law. This move, announced on Friday, comes as the regulator is stepping up its oversight of Silicon Valley’s growing financial services sector.
According to the CFPB, its decision is based on nearly 300 consumer complaints, many of which concern reports of fraud, scams, and unauthorized transactions. The agency has determined that these services have posed a risk to consumers and has therefore ordered federal supervision of Google Payment.
However, Google Payment Corp. has quickly responded by filing a lawsuit against the CFPB, arguing that the regulator’s decision is based on a small number of unsubstantiated complaints concerning a product it no longer offers. The company claims that, as a matter of common sense, a product that no longer exists cannot pose a risk.
The CFPB’s order comes as the regulator is exercising its authority under the Consumer Financial Protection Act, which allows it to supervise financial institutions, even if they have discontinued the services in question. This move could be reversed after President-elect Donald Trump returns to the White House in January, as the Biden administration has been more closely scrutinizing Silicon Valley’s financial services sector.
In recent weeks, the CFPB has finalized new regulations subjecting tech companies to the same supervision as banks if they offer digital wallets and payment services, and has persisted in rulemaking efforts despite calls from Republican lawmakers to desist. The agency’s move is part of its broader effort to protect consumers from potential violations of law in the growing sector of financial services provided by Silicon Valley.