By Douglas Gillison
(Reuters) – The head of the top U.S. consumer finance watchdog agency on Wednesday called on lawmakers to provide stronger protections against the collection and use of consumer data from 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 indicating that companies like JPMorgan Chase & Co (NYSE:) and PayPal (NASDAQ:) were planning to allow the use of customer payment data for targeted advertising and said it was “critically important that Congress also act.”
“These plans to monetize sensitive financial transaction data remind us that the United States is slowly moving toward increased financial surveillance and even financial censorship,” he said.
PayPal did not immediately respond to a request for comment, but Trish Wexler, a representative for JPMorgan Chase, told Reuters that Chopra was mistaken and that Chase was actually allowing customers to sign up for store coupons.
“No transaction or other personal information is ever shared in developing these discount offers,” she said.
Chopra also told the committee he was concerned that companies offering buy-now-pay-later services would leave consumers little choice but to allow similar uses of their data.
The CFPB issued an interpretive rule last month that treats such companies as credit card providers and requires them to investigate disputed charges and issue refunds.
Chopra also rejected claims by Senator John Kennedy, a Republican from Louisiana, that his agency illegally raised funding from the Federal Reserve because the central bank recently operated at a loss.
Such arguments have been circulating among critics since last month’s Supreme Court ruling, which rejected industry-backed arguments that the Constitution did not allow the CFPB to receive funding outside of Congress’s appropriations process.
“How are you entitled to money right now? The Federal Reserve has no revenue,” Kennedy said.
“I can tell you that we have looked at this issue. We believe with all our hearts that everyone is abiding by the law,” Chopra said.
(This story has been corrected to clarify that the coupons apply offline and online, in paragraph 5)
