Large technology companies and innovators in the consumer financial services space should expect to see stepped up regulatory attention ahead. The Consumer Financial Protection Bureau (CFPB) continues to increase its focus on data-intensive business practices and “large technology conglomerates” in consumer finance, as evidenced by the recent statement of Director Rohit Chopra and Chief Technologist Erie Meyer. The statement announces the CFPB’s efforts to step up its capabilities to address “transformative technologies.”¹ This statement was made in conjunction with a statement from the Federal Trade Commission (FTC) that recognized the need to strengthen the capacity and enforcement efforts of the FTC’s technologist group to address the increasing “digitization of the economy.” Both regulators appear aligned in their goal of enhancing internal resources in order to keep apace with technological advances in the industry.

This statement follows a series of analytical publications by the CFPB and its staff on the application of emerging technologies in consumer finance, such as research on technology-driven “disruption” to the traditional payments model, a report on chatbots in consumer finance, and an “issue spotlight” dedicated to Big Tech’s role in contactless payments.

It also follows on the heels of a rule proposal that would give the CFPB new examination authority over “Larger Participants” in the digital wallet and consumer payment app markets. As we noted in our recent client alert, this new examination authority would give the CFPB a broad line of sight into the activities of leading market participants. In this context, the key regulatory areas include the Consumer Financial Protection Act's prohibition against unfair, deceptive, and abusive acts and practices, the privacy provisions of the Gramm-Leach-Bliley Act and its implementing Regulation P, and the Electronic Fund Transfer Act and its implementing Regulation E. Moreover, if the CFPB finalizes its proposed rule to accelerate open banking, as we anticipate it would later this year, it has laid plenty of groundwork for a greater role at the intersection of digital payments and data.

[1] The CFPB’s statement focused on three goals related to emerging technologies—embedding more technologists across the CFPB’s core functions, including in supervisory examinations, enforcement investigations and other regulatory proceedings, conducting research and analysis on the application of emerging technologies, and advancing competitive marketplaces and assisting companies that comply with federal law.