Global: CFPB and EU Collaborate to Tackle Consumer Risks in Emerging Financial Technologies

Top consumer protection officials from the United States and the European Commission have recently convened to deliberate on key issues impacting consumer finance: buy now, pay later (BNPL) schemes, digital payments, and artificial intelligence (AI).

This series of meetings builds on a commitment made in July 2023 by the U.S. Consumer Financial Protection Bureau (CFPB) and the European Commission to engage in an informal dialogue addressing various consumer financial protection topics, according to a joint statement released on Thursday (April 11).

“Our agencies are better equipped to fulfill our public responsibilities through these discussions,” stated Rohit Chopra, director of the CFPB, and Didier Reynders, commissioner for justice and consumer protection of the European Commission.

The dialogue included a focused session on BNPL products and the associated consumer over-indebtedness, discussing the rapid expansion of the BNPL market, consumer risks, existing legal frameworks, and upcoming initiatives targeting the sector.

Another session addressed the challenges and regulatory considerations surrounding digital payments, including open banking and fraud. Discussions also covered the increasing role of nonbank entities in financial transactions, the impact on consumers lacking bank access, and the potential risks of Big Tech’s involvement in consumer finance.

AI was another critical topic, where both entities examined current and prospective regulations, specific cases of AI use in credit scoring in Germany, and concerns about AI-induced discrimination. The talks also touched on enhancing internal capabilities to better understand and regulate AI and related technologies.

Chopra and Reynders emphasized the shared goal of protecting consumer rights across continents, stating, “Together, we can ensure that consumers have their financial data and privacy respected and safeguarded from surveillance and misuse, maintain meaningful options in competitive markets, guard against fraud and manipulation, and access remedies when needed.”

They concluded by expressing eagerness to continue this dialogue, reflecting on the potential broad impacts of financial services digitalization on pricing, customer service, competition, and privacy.