WASHINGTON: Chief consumer finance watchdog Rohit Chopra told US lawmakers on Wednesday (Oct 27) his agency will investigate Big Tech's impact on the flow of money in the economy as leading technology firms use real-time consumer payments systems that collect huge amounts of personal data.
Chopra said Big Tech's entrance into the payment sector raises questions including: "How will these firms harvest and monetise data they collect on our transactions? What criteria will they use to decide who is removed from the platform? How will they ensure that payment systems adhere to consumer protections?"
The Consumer Financial Protection Bureau (CFPB) will also aim to minimise foreclosures on struggling American homeowners and make consumer lending more competitive, he said.
And, it will sharpen its enforcement focus on companies that repeatedly violate consumer finance laws.
Chopra, a longtime consumer advocate tapped by Democratic President Joe Biden, outlined an ambitious agenda during his first hearing as CFPB director before members of the House of Representatives Financial Services Committee.
"Many families continue to struggle to afford their mortgage and rent payments. Many small businesses are facing severe challenges to make 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 creation, calling it overpowerful and unaccountable.
Sworn in as the CFPB's full-time director earlier this month, Chopra built his name as a fierce consumer advocate at the Federal Trade Commission, and previously helped Senator Elizabeth Warren set up the CFPB after it was created in 2010.
"This hearing should serve as a reminder of both the bureau’s broad authority and Director Chopra’s capacity to effectively use the bureau’s toolbox," said Isaac Boltansky, director of policy research for financial firm BTIG.
Republican lawmakers on the panel applauded Chopra's decision to promote marketplace competition, but added they were against a "heavy handed" approach to enforcement.
Just a few weeks into the job, Chopra made his mark when the CFPB ordered Amazon.com, Apple and Facebook Inc to hand over information about how they gather and use consumer payment data.
He told lawmakers that regulators will look into practices that might impede competition.
"There are many places where regulators should be promoting competition and innovation in ways that are good for small businesses and families - and not in a way that allows dominant firms to control more and more about our lives through our data," Chopra said.
That push for clarity is part of a growing interest among regulators and lawmakers about the rapid adoption of technology in various financial products, ranging from cryptocurrency to new "buy now, pay later" lending products.
Democrats' top policy priorities include boosting competition in the consumer finance sector by requiring financial companies to give consumers more control over their financial data - a concept known as "open banking".
Chopra says he is studying open banking regulations in other countries, particularly the UK, and is eager to review the agency's comments. Analysts said they expected the CFPB to move ahead with an open-banking rule first proposed by the agency under the former Trump administration in coming months.
"At the same time, we're going to need to make sure we're protecting privacy, security and other things that are critical," he added.
He said that while he wants to ensure payments platforms operate fairly, transparently and competitively, he does not intend to ban or limit the use of cryptocurrency or blockchain technology that also lean on payment systems.
Chopra's expansive agenda at the CFPB will also include revisiting several major rule easings ushered through under Republican leadership, particularly around debt collection and payday lending.
Consumer advocates are eager to see Chopra erase industry-friendly changes ushered in under Republican leadership and impose tough new rules on the marketplace.
"We hope he will explain how he plans to supercharge the CFPB's efforts to protect consumers from credit reporting mistakes, forced arbitration, overdraft fees and predatory loans," said Michael Litt, a director at Washington-based US PIRG, a consumer advocacy group.