The CFPB and the Technological Revolution
The Consumer Financial Protection Bureau (CFPB) Director Richard Cordray emphasized during the CFPB’s September 11, 2014, meeting with the Consumer Advisory Board the CFPB’s new focus on protecting consumers who use mobile technologies with financial services and products. Cordray cited the following interesting statistics during his presentation about consumers’ skyrocketing use of technology to complete financial transactions: approximately 90% of adults own a cell phone; one-third of cell phone users and more than half of smartphone owners are using mobile banking services; and last year approximately 74,000 consumers per day began using mobile banking services.
The CFPB was established in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), and President Barack Obama appointed Cordray in January 2012 to be its first Director. The CFPB is responsible for, among other duties, writing rules, supervising companies and enforcing federal consumer financial protection laws, restricting unfair, deceptive or abusive acts or practices, and enforcing laws that outlaw discrimination and other unfair treatment in consumer finance. The Consumer Advisory Board is composed of a number of consumer experts from outside the federal government and is responsible for providing advice to the CFPB on a broad range of consumer financial issues and emerging market trends.
The CFPB’s interest in mobile technology is also reflected in the Request for Information it recently issued, which had a comment period that closed on September 10th, to learn more about how (i) mobile payment products can be used to improve underserved consumers’ lives, (ii) technological innovations can offer opportunities to consumers for real-time money management, and (iii) financial institutions are using technologies to better serve consumers. One important respondent to the Request for Information, the Federal Trade Commission, emphasized five key areas for concern about these issues: potential liability for unauthorized charges using prepaid or stored value products; unfair billing practices on mobile carrier bills; privacy of consumers’ personal and financial data; security of such data; and potential use of such information by data brokers and other third parties.
While Cordray noted that there is great opportunity to expand consumers’ access to banking by virtue of the ubiquitous use of mobile devices, he emphasized the tremendous challenge in ensuring that those individuals remain protected in the marketplace. Based on Cordray’s comments to the Consumer Advisory Board and the CFPB’s recent Request for Information, expect the CFPB to increase its issuance of regulations and guidance in the near feature with respect to mobile financial services and products.