You Can’t Make This Up

You’ve got to hand it to the Consumer Financial Protection Bureau. They don’t miss a trick—though many in the payments industry would argue there are at least some cases the bureau should take a pass on. Maybe because there’s no trick in the first place.

Take the case of Google Inc. The Silicon Valley tech giant is one of the CFPB’s most recent targets in a case that has many scratching their heads. It must have the top brass at Google puzzled. At any rate, the company is firing back. It sued the bureau last month following a move by the CFPB to assert federal supervision of the company’s Google Pay wallet, citing what Google says is “a small number of unsubstantiated consumer complaints.”

In the suit, filed in U.S. District Court in Washington, D.C., the same day the CFPB acted, the tech giant argues the case targets a payment service Google no longer offers in the U.S. market. The CFPB dismisses this contention, asserting it maintains supervisory authority regardless of whether a product has been discontinued.

Google shut down Google Pay in America in June, but a separate product, Google Wallet, remains available in the U.S. market. It stores, in digital form, payment cards, boarding passes, and other items commonly found in physical wallets.

Google Pay emerged in 2018 as the result of a combination of a former Google Wallet app, launched iin 2011, and Android Pay, a contactless-payment capability introduced in 2015. The current Google Wallet debuted on Android smart phones in July 2022.

Google, a unit of Alphabet Inc., maintains that the CFPB’s supervisory authority in this case is “burdensome,” given the small number of complaints. At the same time, the CFPB has set what the company views as a “low bar” for its standard of consumer risk.

Now comes the bureau’s “clincher.” Google’s decision to remove Google Pay from the U.S. market does not exempt the tech giant from supervision, the CFPB argues. That contention, understandably, baffles some observers. “It does not make sense,” said Cliff Gray when we called him to ask about the case. Cliff is principal at the payments consultancy Gray Consulting Ventures. But the decision to target Google nonetheless “does not surprise me,” he adds. “The CFPB has been chomping at the bit, and Google’s a wide-open target.”

Now, as experts have said for years, digital wallets are generally a more secure product than physical ones, a point federal watchdogs maybe ought to consider. “Consumers pick an e-wallet that makes the most sense to them,” Gray says, “and now you have this government agency saying you can’t do this.”

—John Stewart, Editor john@digitaltransactions.net