The US watchdog for consumer finance — Consumer Financial Protection Bureau (CFPB) — has announced that it was ordering federal supervision of Google Payment Corp, the internet giant’s payment arm, a decision that the company immediately said it was challenging in the court. CFBP said that it’s claiming supervisory authority over Google Payment Corp., as the agency extends its oversight of nonbank financial platforms.
“While Google Payment Corp. is already subject to CFPB’s enforcement jurisdiction, the CFPB has determined that Google Payment Corp. has met the legal requirements for supervision,” the CFPB said.
While Google discontinued the US version of its Google Pay app earlier this year, some users may still have balances in existing accounts, the CFPB noted.
Google sues CFBP, saying lawsuit lack “commonsense”
Google has immediately challenged the CFPB’s decision in court, arguing that the complaints were unsubstantiated and related to a discontinued product. The company claims that a product that no longer exists cannot pose a risk to consumers.
Google said that the regulator had relied on a small number of unsubstantiated complaints concerning a product it no longer offered. “As a matter of common sense, a product that no longer exists is incapable of posing such risk,” the company’s complaint said.
The CFPB’s move comes as the Biden administration has been increasing scrutiny of Silicon Valley’s financial services offerings. The agency has been particularly active in regulating tech companies, even in the final weeks of the administration.
While the CFPB has not accused Google of wrongdoing, the agency’s order indicates potential violations related to the investigation of consumer complaints and erroneous transfers.
It’s worth noting that the CFPB’s action could be reversed by the incoming Trump administration. The new regulations finalized by the CFPB last month, which subject tech companies to the same supervision as banks for digital wallet and payment services, may also face scrutiny under the new administration. Incidentally, the agency has persisted in rulemaking in the final weeks of Biden’s administration despite calls from Republican lawmakers to desist.
