(Reuters) -The U.S. consumer finance watchdog said on Friday it will impose federal oversight of Google (NASDAQ:) Payment Corp., the internet giant’s payments arm, a decision the company immediately said it would be challenged in court.
The Consumer Financial Protection Bureau announced the move, saying it had determined that the services offered by Google Payments posed a risk to consumers.
The regulator’s move and subsequent lawsuit marked a tussle between the administration and a Silicon Valley behemoth in the final weeks of President Joe Biden’s administration. The regulator’s measure could be reversed after President-elect Donald Trump returns to the White House in January.
Under Biden, the CFPB has kept a closer eye on the growing sector of financial services offered by Silicon Valley than by traditional banks.
The agency cited nearly 300 consumer complaints, many of which involved reports of fraud, scams and unauthorized transactions. It said it was a finding that the company had engaged in misconduct.
Nevertheless, the CFPB order said that consumer complaints indicated that Google Payment had failed to investigate complaints of erroneous transfers, among other possible violations, and that the law allowed for surveillance even if Google had discontinued the services in question.
In a lawsuit filed after the CFPB’s announcement, Google Payment Corp. said. that the regulator had based its decision on a small number of unsubstantiated complaints about a product it no longer offered.
“It is a matter of common sense that a product that no longer exists cannot pose such a risk,” the company’s complaint said.
The CFPB declined to comment on the lawsuit.
Financial regulators use confidential supervisory exams to detect and correct violations of the law by companies.
Last month, the CFPB finalized new regulations that subject tech companies to the same scrutiny that banks currently face when those companies offer digital wallets and payment services.
The agency has continued to make rules in the final weeks of Biden’s administration, despite calls from Republican lawmakers to stop.
