FTC's Khan, Advocates Warn Against Tech’s Expansion Into Payments

Big Tech’s entry into payment services could strengthen platform monopoly power, FTC Chair Lina Khan and consumer advocates told the Consumer Financial Protection Bureau in comments last week.

The CFPB sent orders in October to Amazon, Apple, Facebook, Google, PayPal and Square (now called Block) seeking information on company payment systems. The agency is exploring competitive aspects of Big Tech payments and is considering a potential rulemaking under Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFPB referenced an October statement from Director Rohit Chopra saying the orders build on the FTC's "work to shed light on the business practices of the largest technology companies in the world."

Khan raised concerns in three areas. Expanding into payments could further entrench market positions and Big Tech data ownership, she wrote. It could raise risks of algorithmic bias and discrimination and create “single points of failure.” The “potential risks created by Big Tech’s expansion into payments and financial services are notable and demand close scrutiny,” she said. Several associations, including the Computer and Communications Industry Association, NetChoice and the Information Technology and Innovation Foundation didn’t comment.

A bipartisan group of 33 state attorneys general said they support innovation from real-time payment platforms, given consumer benefits. The group highlighted the importance of platforms ensuring “baseline consumer protections to guard against the substantial harm that can result from user mistakes, fraudulent acts of unscrupulous third parties, and the platforms’ business operations.” Idaho AG Lawrence Wasden (R) and Oregon AG Ellen Rosenblum (D) led the group. AGs from Colorado, Washington, D.C., Iowa, Maryland, North Dakota, Mississippi and Tennessee were among signers.

The CFPB should use its authority without disrupting industry by following proper due process, said the Electronic Transactions Association. The bureau should protect trade secrets, avoid sharing data gathered with other agencies and work with industry to narrow requests, ETA said. ETA encouraged the bureau to “implement appropriate safeguards to limit the burden imposed on recipients to ensure that the Bureau does not hinder further innovation and expansion of access.”

Allowing Big Tech to combine sensitive and valuable payments data with its existing data troves “will further entrench the platforms’ monopoly power and run counter to federal and state antitrust enforcement efforts aiming to rein in their anti-competitive conduct and combat their harms,” the Open Markets Institute wrote.

“We are increasingly concerned that the power amassed by these tech companies is not only anticompetitive but will lead to consumer harm and further blur the line between commerce and banking,” the Consumer Federation of America wrote.

CFPB should determine whether companies are collecting necessary data on consumers and whether companies are using data for stated purposes, said the Center for Democracy & Technology.

The Electronic Privacy Information Center agreed with various commenters about the need for the CFPB to mandate data minimization standards. EPIC also agreed with commenters that the bureau should “subject tech companies, data aggregators, and others that handle financial data to comparable data security standards as financial institutions.”

Fight for the Future accused companies of forcing users to process financial transactions through their internal payment systems: “The companies claim that this is for user protection, but in reality this centralization represents monopoly behavior that endangers data privacy, stifles competition, and restricts user choice.”