On July 17, 2023, Didier Reynders, Commissioner for Justice and Consumer Protection of the European Commission and Rohit Chopra, Director of the Consumer Financial Protection Bureau, announced the start of an “informal dialogue” between their two agencies. Reynders and Chopra indicated that the dialogue would cover a variety of important consumer financial protection issues, including the implications of the “digitalization of the financial services sector.” Both agencies point to the rapid pace at which financial institutions have “expanded their deployment of automated decision making, including the use of artificial intelligence (AI),” as one factor contributing to their shared belief that “if left unchecked, [these developments] could increase consumers’ exposure to fraud and manipulation, limit their product options over time, threaten their control over their own data, and force them to accept more expensive personalized pricing for the same products and services compared to other consumers.”
The agencies’ announcement listed the following topics as those they plan to discuss together as part of the “informal dialogue”:
- Automated decision making and processing of data in financial services, including the deployment of AI . . .;
- New forms of credit such as ‘Buy Now, Pay Later’ products, and the related risks to consumers, including over-consumption and over-indebtedness;
- Strategies to effectively prevent over-indebtedness and to help over-indebted consumers to repay their debt sustainably;
- Digital transformation that ensures fair choice and access to financial services for consumers, including the unbanked, underbanked, and consumers who want to protect their own data; and
- Implications for competition, privacy, security and financial stability of Big Tech companies offering financial services, including payment services.
One “critical financial consumer protection issue” discussed in the announcement was the rise of services and products such as “Buy Now, Pay Later,” which, the agencies emphasized, has “shift[ed] the way people borrow and spend money.” The agencies stressed the importance of working together “to compete with the pace of evolving markets and consumer needs.” More specifically, Reynders and Chopra discussed their shared concern that, because digital payments are “faster and more frictionless,” more and more consumers will use them without adequately guarding against fraud and related issues.
The agencies plan to meet a minimum of once per year to engage in a dialogue that will involve discussions among a wide variety of experts, industry representatives and stakeholders.