Did The CFPB Follow PRA Requirements In Issuing Its Big Tech Orders?

• Published date: 23 November 2021
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Financial Services, Corporate and Company Law
• Law Firm: Alston & Bird
• Author: Mr Brian Johnson

On October 21, the CFPB issued a series of orders to "collect information on the business practices of large technology companies operating payments systems in the United States."

The CFPB sent the orders to six companies: Amazon, Apple, Facebook, Google, PayPal, and Square. In a statement accompanying the press release announcing the orders, Director Chopra described the CFPB's action as an "inquiry into big tech payment platforms" and stated that he had ordered "six technology platforms offering payment services" to turn over information about their products, plans and practices. Responses from the companies to the CFPB orders are due by December 15.

The CFPB issued the orders pursuant to Section 1022(c)(4) of the Consumer Financial Protection Act (CFPA), its so-called market monitoring authority. See 12 U.S.C. 5512(c). This authority permits the CFPB to collect information regarding the activities of "covered persons" (a defined term) for the purpose of monitoring markets for risks to consumers in the offering or provision of "consumer financial products or services" (another defined term). This jurisdictional limitation is important - the CFPB cannot issue these orders to any company in the country; the orders may only be sent to companies that are engaged in offering or providing financial services (or that are service providers to those companies). Hence the CFPB's necessary and intentional focus on large technology companies operating payments systems in the United States, rather than all technology companies.

Importantly, CFPB information collections under Section 1022(c)(4) of the CFPA are not exempt from the Paperwork Reduction Act (PRA) of 1995. See 44 U.S.C. 3501 et seq. PRA requires that agencies obtain Office of Management and Budget (OMB) approval before requesting most types of information from the public. See 5 C.F.R. 1320.5(a). As part of the general PRA review process, agencies must seek two rounds of public comment regarding a proposed information collection for a combined minimum of 90 days.

In reviewing an agency's information collection request, OMB's Office of Information and Regulatory Affairs (OIRA) will determine among other things whether the request is necessary for the proper performance of the agency's functions, is not duplicative of information otherwise accessible to the agency, and has practical utility. See 5 C.F.R. 1320.5(d). If OIRA approves the agency's information collection request, OMB will issue the agency a...