RSSThe Consumer Financial Protection Bureau recently placed Google’s payments division under its supervisory authority, leading to a lawsuit from the company.
The CFPB said, based on consumer complaints, that it had “reasonable cause” to believe Google Payment Corp. didn’t adequately investigate allegations of erroneous transfers through its P2P payment platform and failed to properly explain the results of its investigations when it determined no erroneous transfer took place. The company also allegedly failed to protect consumers from liability for erroneous transfers.
Supervisory designation allows the bureau to periodically examine and compile reports to assess compliance with federal consumer financial laws. “Many consumers submitted complaints to the bureau after they notified Google that a transfer was unauthorized or otherwise erroneous and Google refused to issue a refund or take other steps to remediate the error,” according to the Dec. 6 order. “Numerous consumers expressed a concern that Google did not adequately investigate the allegedly unauthorized or erroneous transfer.”
Google has since discontinued its Google Pay App and P2P payment platform in the United States. However, the CFPB said it still should have supervisory authority because the designation considers past conduct as the basis for supervisory designation.
On Dec. 6, Google filed a federal lawsuit against the CFPB over the supervisory designation. Google said the bureau based its finding “on just 26 cherry-picked and unverified complaints regarding GPC’s now-retired P2P product across a three-year period, which is an infinitesimally small number of complaints in comparison to millions of payment transactions the CFPB concluded the product facilitated during that same time period.”
The Mountain Valley, Calif.-based company said Congress has not authorized the bureau to designate a company for ongoing supervision for a product it no longer offers.
“The CFPB’s conduct violates multiple restrictions on agency action,” according to Google. “Under its interpretation … any company that declines the CFPB’s request that it consent to supervision — and instead chooses to exercise its statutory right to contest the CFPB’s allegations of ‘risks to consumers’ — will be met with the publication of CFPB’s designation order.
“This position sends a chilling and damaging message to all companies seeking to innovate in the consumer financial services space,” the bureau added. “For these and other reasons, GPC respectfully requests that this court set aside the CFPB’s unlawful order.”
