The Consumer Financial Protection Bureau (CFPB) published an order placing Google Payment Corporation under supervision over concerns that its recently-discontinued Google Pay app might have violated consumer protection laws.
The determination will give the CFPB power to review Google’s books and records, and highlight issues that require remediation under consumer protection laws. That supervision will be akin to how the agency monitors banks, and will likely be expensive and onerous.
The payment app’s users stated in complaints to the CFPB that they experienced difficulty obtaining customer assistance in the aftermath of fraudulent transactions. Google was further accused of taking insufficient steps to investigate or refund fraudulent transactions and refusing to explain its decisions.
The order, which is not an enforcement action, does not necessarily mean that the CFPB has found evidence of legal wrongdoing. However, the order noted that the issues flagged by Google Pay’s customers are likely to have breached the Electronic Fund Transfer Act, which requires letting customers dispute illicit transactions.
The supervisory order marks an exertion of the CFPB’s authority over nonbank entities that are suspected of creating consumer risk. That power was vested in the agency under the Dodd-Frank and Consumer Protection Acts, but remained dormant until 2022 when the CFPB issued a notice stating that it would begin to exercise it.
Google fights back
Google sued the CFPB in response to the supervisory order, accusing the agency of overreach and misinterpreting a “small number of unsubstantiated user complaints.” Google also stated that the agency’s order sets an “exceedingly low bar” for supervision.
Google also argued that the CFPB’s supervision would be superfluous as Google Pay has already been shuttered in the US, and that ongoing risk to consumers would therefore be a moot concern.
The legal battle creates another headache for Google, which recently lost a landmark federal antitrust lawsuit in which it was ruled a monopolist.