In a significant legal move, Google has filed a lawsuit against the Consumer Financial Protection Bureau (CFPB), challenging the agency’s decision to supervise Google Pay.
Google challenges supervision of Google Pay
The case, filed in the US District Court in Washington, DC, raises questions about the scope of the CFPB’s regulatory authority over nonbank financial entities and its handling of user complaints.
The dispute stems from the CFPB’s announcement that it would exercise supervisory authority over Google Payment Corp., the payment division of Alphabet, citing concerns about consumer risks.
Google, however, contends that the bureau’s decision is unjustified and burdensome.
The tech giant argues that the CFPB’s actions are based on a now-defunct peer-to-peer payment product previously offered in the US.
“This is a clear case of government overreach,” said José Castañeda, a Google spokesperson.
He added that Google Pay’s peer-to-peer payment service “never raised risks” and is no longer available in the US, making the CFPB’s oversight unwarranted.
In its lawsuit, Google described the CFPB’s supervision as unnecessary, stating it was triggered by a “small number of unsubstantiated user complaints.”
The company further argued that the CFPB had set an “exceedingly low bar” for determining risks to consumers, resulting in undue regulatory oversight.
The CFPB, however, has defended its decision, noting that while Google Payment is already under its enforcement jurisdiction, it also meets the criteria for supervisory examination.
The bureau clarified in a public statement that its order “does not constitute a finding that the entity has engaged in wrongdoing” and does not mandate an immediate supervisory examination.
This lawsuit follows the CFPB’s broader push to extend its oversight to large nonbank financial companies, including digital payment platforms and wallets.
In 2022, the agency announced its intention to monitor such entities, emphasising their potential impact on consumer protection.
As this legal battle unfolds, it highlights the growing tension between regulators seeking to ensure consumer safety and tech companies wary of what they perceive as excessive oversight.
The outcome could have far-reaching implications for how digital payment platforms are regulated in the US, potentially shaping the future of fintech governance.
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