CFPB’s Chopra Has Payments and Crypto In Focus

Sheppard Mullin Richter & Hampton LLP

On July 27, CFPB Director Chopra was interviewed in multiple publications, here and here, about, among other topics, how the CFPB could seek to help mortgage borrowers strained by the Federal Reserve’s battle against inflation and how the agency is looking at cryptocurrency. Below are some of the more important updates from the interviews.

Cryptocurrency. According to the Director, crypto raises new consumer protection questions that the CFPB is studying, including whether additional fraud-related guidance is needed amid a bevy of complaints from peer-to-peer payments users. Chopra said that “right now, cryptocurrency, including stablecoins, are not primarily used in consumer payments. They’re really used for speculative trading purposes.” Chopra pointed to guidance about the misrepresentation consumers have of deposit insurance as applied to crypto.

Litigation. Chopra said that he thinks it is “important that the agency really be willing to prove its case in court. I think we have more credibility when we can really litigate cases against well-resourced firms, who aren’t going to easily just back down and, in fact, will be willing to spend the money sometimes to litigate.”

Fraud in Peer-to-Peer Payments. CFPB Director emphasized that the agency under his direction is looking at Big Tech payment systems and they are looking very closely at how these apps operate.

Credit Card Overdraft Fees. The Director has asked his examiners to focus more attention on the institutions that have an aberrant level of their deposit account fee revenue coming from those sources. The Director said that the agency received 80,000 submissions to their request for information on fees charged in financial services.

Putting It Into Practice: In these latest interviews, Director Chopra stayed true to the mission of his agency to prevent abusive and deceptive financial practices in consumer financial transactions. As a result, the Director said that the agency would have a “heavy” focus on the adoption of cryptocurrencies for real-time payments, noting that big online firms could push widespread adoption of the technology.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Sheppard Mullin Richter & Hampton LLP

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