Consumer protection agency examines how Apple, Facebook and Amazon use financial data
WASHINGTON â Big tech companies face questions from government on another front: how they use consumers’ financial and other information.
The Consumer Financial Protection Bureau said Thursday it has launched an investigation into consumer data practices at Amazon.com Inc., Apple Inc., Google and Facebook Inc. of Alphabet Inc. and other companies. The move opens a new front in Washington’s scrutiny of business.
The office has issued orders asking companies for information that would help it “better understand how these companies use personal payment data and manage access to user data.” All companies are engaged in financial services for consumers or have the ambition to develop in this sector.
“Big tech companies are eagerly expanding their empires to better control and understand our spending habits,” CFPB director Rohit Chopra said in a statement. “We ordered them to produce information about their business plans and practices.”
The agency’s questions are far-reaching. They range from inquiries about how consumer data flowing through businesses is used for lending or other decisions, to how data determines which ads are served to consumers. In total, companies are facing requests for answers to dozens of questions, while the bureau also said it plans to solicit public comment on the requests.
The CFPB action is the latest move by the Biden administration to scrutinize big tech companies. He named people who say lax antitrust enforcement, especially in the tech industry, has allowed dominant companies to hamper rivals and stifle competition. These include Federal Trade Commission Chairman Lina Khan and Tim Wu, Special Assistant to the President for Technology and Competition Policy.
Republican and Democratic lawmakers have also called for stricter regulations, such as strengthening privacy and competition laws.
Mr Chopra, who was sworn in as the new CFPB director on October 12, previously worked with Ms Khan at the FTC. He told Senate lawmakers he would prioritize looking at issues such as data privacy. While at the FTC in 2019, Mr Chopra joined another Democrat in opposing a $ 5 billion settlement with Facebook over an investigation into the tech giant’s missteps in the matter. confidentiality, saying it was not difficult enough.
“It will beâ¦ essential for the CFPB to take a close look at how large tech companies and others enter financial services, the impact on our privacy and personal data,” he said during of a hearing in March.
Two other companies subject to the information requests are expected to include payment processors Square Inc. and PayPal Holdings Inc., the people said.
The office said it would also study the practices of Chinese tech giants that offer payment services.
Facebook and Google spokespeople declined to comment. An Amazon spokesperson did not comment. Representatives from Apple, Square and PayPal did not respond to requests for comment.
“We look forward to working with Director Chopra and the CFPB on this important effort,” said Jodie Kelley, managing director of the Electronic Transactions Association, which represents all companies subject to Thursday’s order except from Facebook. âThe digital transactions industry has a good story to tell about its efforts to protect consumer data. “
The CFPB has been politically polarized ever since former President Barack Obama called on Elizabeth Warren, then a law professor at Harvard, to set it up. Ms Warren, a Democrat, is now a United States Senator representing Massachusetts.
Democrats wanted a muscular CFPB to tackle what they call financial industry excesses. Republicans and businesses on Wall Street have criticized the office as an instrument of excessive government regulation, with too much power over a significant slice of the economy.
The banking industry, a frequent target of CFPB rules, said it welcomed the move to carefully scrutinize tech companies, as it could put companies on a level playing field with lenders.
âSince the Bureau’s inception, an increasing portion of banking business has taken place outside the purview of key regulators, putting consumers and the resilience of the financial system at risk,â said Richard Hunt, President and CEO of the Consumer Bankers Association.
CFPB demands from companies could portend a push to ease the passage of consumers between financial firms. A July executive order from Mr Biden encouraged the CFPB to issue rules allowing customers to download their bank details and pass it on to another institution. The directive was part of a larger executive decree aimed at promoting competition in a number of sectors.
Copyright Â© 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8