WASHINGTON, Oct.27 (Reuters) – Rohit Chopra, head of consumer finance oversight, told U.S. lawmakers on Wednesday that his agency would examine the impact of Big Techs on money flows in the economy as leading technology companies use real-time consumer payment systems that collect huge amounts of personal data.
Chopra, head of the Consumer Financial Protection Bureau (CFPB), said Big Tech’s entry into the payments industry raises questions, including, “How will these companies harvest and monetize the data they collect on our transactions? What criteria will they use to decide who gets removed from the platform? How will they ensure that payment systems respect consumer protections? “
The agency will also aim to minimize foreclosures on distressed US homeowners and make consumer loans more competitive, he said.
And, it will increase its enforcement on companies that repeatedly break consumer credit laws.
Chopra, a longtime consumer advocate solicited by Democratic President Joe Biden, laid out an ambitious agenda during his first of two Congressional hearings this week as CFPB director. Wednesday’s hearing before members of the House of Representatives’ Financial Services Committee will be followed by a Thursday session to testify before the Senate banking panel.
“Many families continue to struggle to pay their mortgages and rent. Many small businesses are facing serious difficulties making ends meet,” Chopra told the panel on Wednesday.
Chopra’s hearing will likely reinvigorate the CFPB’s status as a political lightning rod. Republicans have sought to handcuff the agency since its inception, calling it overkill and irresponsible.
Sworn in as full-time CFPB director earlier this month, Chopra has made a name for himself as a fierce advocate for middle-class Americans in the Federal Trade Commission, and previously helped Senator Elizabeth Warren put established the CFPB after its creation in 2010.
“This hearing should serve as a reminder both of the broad authority of the office and of Director Chopra’s ability to effectively use the office toolbox,” said Isaac Boltansky, director of policy research for financial firm BTIG.
Just weeks after taking office, Chopra made his mark when the CFPB ordered Amazon.com Inc, Apple Inc and Facebook Inc to pass on information on how they collect and use consumer payment data.
“There are many places where regulators should promote competition and innovation in a way that is good for small businesses and families – not in a way that allows dominant companies to increasingly control our. lives thanks to our data, ”said Chopra.
This drive for clarity is part of a growing interest among regulators and lawmakers in the rapid adoption of technology in a variety of financial products, ranging from cryptocurrency to new ‘buy now, pay later’ loan products.
While Republican members of the panel applauded Chopra’s decision to examine practices that may impede competition in lending, they added that they were against a “heavy” approach to enforcement.
The Democrats’ top policy priorities are to boost competition in the consumer credit industry by requiring financial companies to give consumers more control over their financial data – a concept known as “open banking.”
Analysts said they expected the CFPB to move forward with an open banking rule first proposed by the agency under the former Trump administration in the coming months.
Chopra said on Wednesday he was studying such regulations in other countries and was eager to consider the comments the CFPB received on the proposal.
“At the same time, we will have to make sure that we protect privacy, security and other essentials,” he added.
The head of the agency said that if he wanted to ensure that payment platforms operate “in a fair, transparent and competitive manner,” he does not intend to ban or limit the use of cryptocurrency or blockchain technology that also relies on payment systems.
Chopra’s broad agenda at CFPB will also include the review of several major rule relaxations ushered in under Republican leadership, particularly with regard to debt collection and payday loans.
Reporting by Katanga Johnson and Pete Schroeder in Washington; Editing by Megan Davies, Chris Reese, Jonathan Oatis and Aurora Ellis
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