Douglas Gillison
(Reuters) – The head of the leading U.S. consumer credit watchdog on Wednesday called on lawmakers to pass stronger protections against the collection and use of consumer data in payment processing and so-called “buy now, pay later” services.
Rohit Chopra, director of the U.S. Consumer Financial Protection Bureau, gave his first testimony on Capitol Hill since a Supreme Court ruling last month upholding the constitutionality of the agency’s funding structure.
In prepared remarks, Chopra cited recent media reports that companies such as JPMorgan Chase & Co (NYSE:) and PayPal (NASDAQ:) were planning to allow the use of customer payment data for targeted advertising, and said that “it is critically important that for Congress to act too.”
“These plans to monetize sensitive financial transaction data are a reminder that the United States is gradually moving toward increased financial oversight and even financial censorship,” he said.
PayPal did not immediately respond to a request for comment, but Trish Wexler, a spokeswoman for JPMorgan Chase, told Reuters that Chopra was mistaken and that Chase was in fact allowing customers to sign up to receive coupons for online purchases.
“No transactions or other personal information is ever disclosed when developing these discount offers,” she said.
Chopra also told the committee that he was concerned that companies offering “buy now, pay later” services could leave consumers with little choice but to allow similar uses of their data.
Last month, the CFPB issued an interpretive rule treating such companies as credit card providers and requiring them to investigate disputed fees and issue refunds.
Chopra also rejected claims by Sen. John Kennedy, Republican of Louisiana, that his agency had illegally raised funding from the Federal Reserve because the central bank had recently been operating at a loss.
Similar arguments have circulated among the agency’s critics since a Supreme Court decision last month that rejected industry-backed arguments that the Constitution prevents the CFPB from receiving funding outside of the congressional appropriations process.
“How are you entitled to any money now? The Federal Reserve doesn’t have any revenue,” Kennedy said.
“I can tell you that we have looked into this issue. We truly believe that everyone is following the law,” Chopra said.