Skip to content

Brought to you by

Dentons logo

Tech Law Talks

The latest trends and developments in tech law to help you grow, protect, operate and finance your business.

open menu close menu

Tech Law Talks

  • Home
  • About us
  • Topics
    • AML/ KYC
    • Consumer Finance
    • Corporate
    • Crypto/Blockchain
    • Insurtech
    • Privacy
    • Payments
    • Securities

CFPB targets data management practices – What Canadian payment companies need to know

By Tracy Molino and Noah Walters
January 24, 2022
  • Consumer Finance
  • Crypto/Blockchain
  • Payments
Share on Facebook Share on Twitter Share via email Share on LinkedIn

On October 21, 2021, the United States Consumer Financial Protection Bureau (CFPB) –a regulatory agency that, among other things, implements and enforces federal consumer financial law – issued orders against six Big Tech companies requesting detailed information about their business practices in relation to payment systems they operate in the United States. According to CFPB’s official statement, the orders are intended to help the CFPB better understand how Big Tech companies exploit the data they collect through their payment platforms. They are notable in that they highlight not only the powerful consumer insights that can be gleaned from smarter, more data-rich payment systems, but also the changing risks that the use of that data may bring.

Specifically, the orders will compel these Big Tech companies to share information on the following:

Data harvesting and monetization

Payment companies may be actively sharing payments-related data across product lines and with data brokers and other third parties. Accordingly, the CFPB’s probe into data harvesting and monetization is designed to uncover (1) whether payment companies engage in invasive financial surveillance and combine the data they collect on consumers with their geolocation and browsing data, and (2) whether they in turn use this data to deepen behavioral advertising, engage in price discrimination, or sell to third parties. The CFPB’s stated concern is that current practices may not align with consumer expectations.

Access restrictions and user choice

As payment systems become widely adopted, there are concerns that the resulting powerful network effects could pressure merchants and other players into participation. Accordingly, the CFPB’s review of current access restrictions and user choice will inform its analysis of whether a payment platform engages in fair, transparent and competitive market practices. As part of its mandate, the CFPB will investigate whether payment platforms stifle innovation and take advantage of small businesses. Any current restrictive access policies and how those policies affect consumer and business choice may inform the CFPB’s determination.

Other consumer protections

Ultimately, the CFPB plays a part, along with the larger Federal Reserve system, in shaping the development of real-time payments in the United States. To that end, the CFPB will endeavor to ensure that new payment platforms ensure key consumer protections are in place (for example: responsive dispute resolution and complaint management systems).

What this means for Canadian payment companies

While Canada’s regulatory landscape differs from that of the United States, advances in real-time payments and retail payments regulation continue to move forward at a reasonable pace. The same themes including: advancing innovation, supporting competition, and ensuring appropriate consumer and data protection schemes are in place, will be considered in this country as well, particularly as advancements in open banking and the finalization of the Retail Payment Activities Act and supporting regulations continue.

To learn more about how your business can prepare for advancements in open banking and payments regulation, reach out to Tracy Molino and Noah Walters. 

Share on Facebook Share on Twitter Share via email Share on LinkedIn
Subscribe and stay updated
Receive our latest blog posts by email.
Stay in Touch
Tracy Molino

About Tracy Molino

Tracy Molino is counsel in our Banking and Finance group. Tracy has extensive experience with payments law and technology, bank regulatory and policy matters, and consumer protection issues.

All posts Full bio

Noah Walters

About Noah Walters

Noah Walters (He/Him/His) is an associate in the Banking and Finance group at Dentons. His practice involves representing blockchain, FinTech and other emerging technology companies on financing and regulatory matters.

All posts Full bio

RELATED POSTS

  • Payments

The pandemic’s effect on payments in Canada – Part 3: nine months later

By Tracy Molino
  • Consumer Finance
  • Crypto/Blockchain
  • Payments

A future for money? Exploring Central Bank Digital Currency and Stablecoin Cryptocurrency Systems: Part 5 – Evaluating Stablecoins

By Tracy Molino and Noah Walters
  • Crypto/Blockchain

The oracle problem: How to protect yourself from liability

By Tracy Molino and Noah Walters

About Dentons

Dentons is designed to be different. As the world’s largest law firm with 20,000 professionals in over 200 locations in more than 80 countries, we can help you grow, protect, operate and finance your business. Our polycentric and purpose-driven approach, together with our commitment to inclusion, diversity, equity and ESG, ensures we challenge the status quo to stay focused on what matters most to you. www.dentons.com

Dentons boilerplate image

Twitter

Topics

  • AML/ KYC
  • Consumer Finance
  • Corporate
  • Crypto/Blockchain
  • Fintech
  • General
  • Insurtech
  • Payments
  • Privacy
  • Securities

Subscribe and stay updated

Receive our latest blog posts by email.

Stay in Touch

© 2023 Dentons

  • Legal notices
  • Privacy policy
  • Terms of use
  • Cookies on this site