The US Consumer Financial Protection Bureau (CFPB) has announced that Google Payment, a subsidiary of Alphabet, will now fall under its federal supervision. The decision comes amid concerns over the company’s consumer protection measures in its financial services offerings, including Google Pay Balance and its now-defunct peer-to-peer (P2P) payment platform.
The CFPB’s decision to impose supervision follows an evaluation of Google Payment’s error resolution and fraud prevention practices, which the agency claims pose risks to consumers. According to the CFPB, the move is intended to mitigate potential issues and enhance oversight of non-bank financial services firms.
Google’s lawsuit to block oversight
In response to the CFPB’s supervisory order, Google has reportedly filed a lawsuit challenging the agency’s authority. The tech giant argues that the supervision is unwarranted, with company representatives reportedly describing consumer complaints cited by the CFPB as “unsubstantiated.” “This is a clear case of government overreach involving Google Pay peer-to-peer payments, which never raised risks and is no longer provided in the US, and we are challenging it in court,” said Google spokesman Jose Castaneda, as quoted by various media publications.
The lawsuit comes amid allegations that Google Payment failed to adequately investigate fraudulent charges and provide clear explanations to affected users. However, the CFPB has clarified that the supervision does not imply wrongdoing by the company, but rather seeks to proactively address risks posed to consumers.
The CFPB’s oversight was triggered by numerous consumer complaints relating to Google Pay Balance and the P2P payment service, which allowed users to transfer funds and make payments through the Google Pay app. While the P2P service and certain features of the app were discontinued earlier this year, the stored-value Google Pay Balance product remains available for limited purposes, such as withdrawing existing funds.
The US government agency’s supervisory authority over Google Payment represents a broader push to ensure compliance among financial service providers that are not traditional banks. Under the Consumer Financial Protection Act, the agency can designate entities for supervision if their conduct is deemed to pose risks to consumers.
This marks only the second time the CFPB has made public a contested supervisory designation order. According to the agency, the decision to disclose the order aims to enhance transparency and shed light on how it assesses potential consumer risks. The agency’s supervisory examinations, though confidential, are intended to help companies identify and address potential legal violations. Most firms targeted by the CFPB’s supervisory notices have opted to comply voluntarily. Google’s decision to contest the notice in court sets the stage for a legal battle that could shape the regulatory landscape for non-bank financial firms.
The CFPB’s supervisory order comes amid increasing regulatory scrutiny on Google’s parent company. Last month, the US Department of Justice (DoJ) signalled plans to ask a federal judge to require Google to divest its Chrome browser. The request is part of a broader antitrust case that aims to curb Google’s dominance in the digital market. This development follows an August 2024 ruling by U.S. District Judge Amit Mehta, which concluded that Google had unlawfully monopolised the search market, violating federal antitrust laws.
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