Consumer Bureau Fines Prison Predator
Big Tech Payment Schemes Get Scrutiny
The Consumer Financial Protection Bureau (CFPB) this week announced a fine and other penalties for prison financial services provider (predator) JPay.
In summary, JPay violated the Consumer Financial Protection Act (CFPA) by charging consumers fees to access their own money on prepaid debit cards that consumers were forced to use. JPay also violated the Electronic Fund Transfer Act (EFTA) when it required consumers to sign up for a JPay debit card as a condition of receiving government benefits — in particular, “gate money,” which is money provided under state law to help people meet their essential needs as they are released from incarceration.
The enforcement action includes $4 million in refunds to consumers who were harmed by these practices and a $2 million civil penalty. Additionally, the CFPB’s consent order with JPay prevents the company from charging any fees on cards it issues with the exception of an inactivity fee after 90 days of inactivity.
Big Tech Firms Face Scrutiny Over Payment Systems
The Consumer Financial Protection Bureau (CFPB) announced today it is collecting information from Big Tech firms on their payment processing systems. The CFPB’s move comes as concerns arise over how companies like Apple, Google, and Facebook use consumer data.
“Big Tech companies are eagerly expanding their empires to gain greater control and insight into our spending habits,” said CFPB Director Rohit Chopra. “We have ordered them to produce information about their business plans and practices.”
Large technology firms such as Apple and Google have sought to integrate payments services into their operating systems. Person-to-person (P2P) payments platforms such as Venmo and CashApp have grown quickly, and speedy growth can present risks to families and businesses. Chinese giants Alipay and WeChat Pay are part of broader super apps that touch multiple parts of a consumer’s life and until recently were actively seeking to expand their presence in the US market.
Consumer advocacy group Public Citizen promptly issued a statement in support of the CFPB’s efforts and urging diligent work to protect consumer interests. Robert Weissman, President of Public Citizen, said:
“The action taken today by the CFPB is what Americans need and expect from financial regulators. The Bureau was designed to protect us from unfair practices, especially corporate schemes that a regular person can’t possibly know are occurring, and it’s doing just that under Rohit Chopra’s leadership.
“From what we know about Big Tech firms — their untrustworthiness, their maniacal interest in surveillance at the expense of consumer privacy, their commitment to cross-fertilization among products and revenue chains — there’s every reason to worry that widespread, serious abuses will accompany their expanding involvement in the financial sector. Thank you, CFPB, for identifying and getting ahead of this issue before it emerges as the next consumer finance scandal.”
A Call to Protect Renters
Senator Sherrod Brown of Ohio, Chair of the Senate Banking, Housing, and Urban Affairs Committee is calling on newly-confirmed Consumer Financial Bureau (CFPB) Direct Rohit Chopra to conduct a comprehensive review of the tenant screening industry. This industry is made up of companies that collect consumer data and provide reports on prospective tenants to landlords.
The Committee’s review of submissions show that tenant screening companies appear to respond expeditiously to resolve complaints related to inaccurate information contained in screening reports. Nonetheless, prospective tenants may be harmed by inaccurate tenant screening reports as landlords are not required to delay renting a property to another tenant while an adverse decision is being challenged. This results in applicants potentially losing out on both the housing opportunity and the non-refundable rental application fee, which includes the cost of the tenant screening report, required when applying for rental housing.