US consumer-finance watchdog should take 'hard look' at Big Tech’s entry into financial services, Chopra says

Rohit Chopra, President Joe Biden’s nominee to head the US Consumer Financial Protection Bureau, said the agency needs to better understand how technology giants’ entry into financial services will affect consumers’ privacy and personal information, as well as companies’ ability to discriminate.

This entry “will change financial services fundamentally, and we must ensure we have a vibrant and competitive market, and not one that’s simply dominated by a few,” Chopra said yesterday at his confirmation hearing before the Senate Banking Committee.

It will “be critical for CFPB to take a hard look at how Big Tech companies and others are entering financial services, the impact on our privacy and our personal data,” he said.

Chopra added: “There are real questions about transparency. I’ve noted that there are many types of algorithmic decision-making where simply people are unable to ascertain why a certain decision has been made.”

He also cited the US Department of Housing and Urban Development’s lawsuit against Facebook for allegedly violating the Fair Housing Act.

“This has raised questions about discrimination,” Chopra said.

The 2019 suit filed by then-HUD Secretary Ben Carson accuses the social media giant of “encouraging, enabling and causing housing discrimination” by allowing companies to use its platform to improperly shield those who can see certain housing ads.

— Teeth for BIS speech —

The comments by Chopra, who still has to be confirmed by the full Senate, give teeth potentially to a speech by Agustin Carstens, general manager of the global Bank for International Settlements, in January.

Carstens said the financial-sector entry of tech giants such as Amazon, Facebook and Alibaba poses financial stability, competition and privacy threats that should be addressed through company-by-company oversight.

“It is clear that Big Techs put policymakers in a thorny position,” he said.

Carstens focused on the need for safeguards for cloud-computing data storage offered to banks by a few tech giants, including Amazon Web Services, Microsoft Azure and Alphabet’s Google Cloud.

The Basel-based Bank for International Settlements, consisting of central banks and financial regulators, can issue guidance but nothing binding.

— Chopra at FTC —

Chopra, if confirmed as CFPB director, would have the authority to initiate investigations, adopt rules and impose fines.

He is a Democratic member of the US Federal Trade Commission who was confirmed for that position by the Senate.

The FTC’s $5 billion settlement with Facebook over its privacy dealings didn’t go nearly far enough, Chopra said in his 2019 dissent. The fine should have been higher, the FTC investigation should have continued, and Facebook Chief Executive Mark Zuckerberg should have been named as a defendant in the settlement, he said.

The decision “gives Facebook a lot to celebrate,” Chopra said at the time. “Here’s the bottom line: Facebook’s flagrant violations were a direct result of their business model of mass surveillance and manipulation, and this action blesses this model.”

Chopra would take over an agency that recovered far less for consumers during the Trump administration than it did during the Obama administration, when it started operating for the first time after being created by the 2010 Dodd-Frank Act.

The Trump administration also marginalized fair-lending enforcement, removing its office from the agency’s enforcement unit and putting it under the director’s office.