CFPB singles out Google Pay for Closer Scrutiny

Google Payment Corp. now has to open its books to federal examiners the same as banks and other regulated financial institutions. That's the word out of the Consumer Financial Protection Bureau. But it's not the final word, as Google is challenging the CFPB order subjecting its payment arm to supervisory oversight.

Google Payment Corp. is already subject to CFPB enforcement authority, which means the CFPB can take disciplinary action if Google Pay is found to be violating consumer protection laws. Supervisory authority allows the agency to examine the company's books, single out potential problems and ensure ongoing compliance by recommending corrective actions.

In issuing an official "order" on Dec. 6, 2024, asserting its supervisory authority, the CFPB explained that examinations are a "confidential process" intended to help companies identify and rectify "potential violations of law."

"Importantly, the CFPB's order does not constitute a finding that [Google] has engaged in wrongdoing," the order stated.

The CFPB said its determination was based on consumer complaints and how Google has investigated alleged erroneous transactions involving Google Pay Balance, a stored-value product tied to the peer-to-peer product Google Pay.

"Google has not taken adequate steps to monitor, prevent, and detect fraud or to alert consumers to the risk of fraud and steps that can be taken to prevent fraud," the CFPB wrote in its supervisory order. It added that "one-third of all consumers who submitted a complaint about Google alleged that they were a victim of a fraud, scam, or unauthorized transaction perpetrated on Google's P2P payment platform."

Google cries foul

In a lawsuit filed in U.S. District Court for the District of Columbia, Google contested the CFPB's authority to supervise its digital payment service, describing it as a "burdensome form of regulation."

Google did not respond to The Green Sheet's queries about the lawsuit. But in a statement to CNN Business, a company spokesman described the order as "a clear case of government overreach." He added that the Google Pay Balance is no longer provided in the United States.

The CFPB order noted that Google discontinued the product in the United States in February 2024. However, it added that U.S. consumers can continue to hold funds in Google Pay Balance accounts and spend those funds using preexisting Google Pay Balance cards and Google Pay accounts.

The legal fracas between Google and the CFPB comes amidst efforts by the consumer watchdog agency to subject large technology companies, particularly those offering digital wallets, to closer scrutiny with an eye toward mitigating risks to consumers.

The agency said the new authority gives it tools necessary to enforce several consumer protections with big tech companies, such as the right to opt out of data collection and sharing, and the ability to dispute transactions directly with a payment app provider. The CFPB claimed some digital wallet providers have been shifting consumer disputes to financial institutions that issue cards loaded onto the wallets; they won't be able to do that under the new rule.

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