Google sues CFPB, challenges oversight of retired product

In a lawsuit filed Friday, Google said that the Consumer Financial Protection Bureau (CFPB), which placed the company’s payments arm under supervision earlier in the day, had acted beyond its authority when it acted on complaints about a recently retired product.

Google Pay, the retired product in question, provided peer-to-peer (P2P) payment functionality, allowing users to pay friends, family and other individuals on the app. While Google still provides some financial services through Google Wallet, a separate app to Google Pay, these services do not include P2P transactions.

The CFPB said in its order that Google’s decision to discontinue the Google Pay app in the U.S. “may be relevant to the statutory framework that guides the Bureau’s exercise of supervisory authority, but it is not determinative of the threshold inquiry of whether a supervisory designation is appropriate,” according to the CFPB order.

Google responded in its lawsuit, filed in the U.S. District Court for the District of Columbia, by saying that Congress had not authorized the CFPB to place a company under supervision based on a product it no longer offers. Rather, Congress intended the CFPB’s supervisory authority “as a mechanism to address current or future risks to consumers — which are not present, or even possible, here.”

Google has offered financial services of varying types since at least 2006, when it launched Google Checkout, a way for users to store payment card and shipping information in their Google account for online purchases. Since then, Google has offered financial services under a variety of brand names, including Android Pay, Google Pay, Google Pay Send and Tez (a payment product specific to India).

Notably, Google has also discontinued brands it later re-launched. In 2011, Google launched P2P payments under the brand name Google Wallet. In 2018, Google discontinued the name by unifying P2P functionality and its near field communication (NFC) payment app Android Pay into a single system called Google Pay.

Then, in 2022, the company relaunched the Google Wallet brand name. Today, that product is a true digital wallet, allowing users to store and use payment cards, loyalty cards, event and flight tickets, digital car keys, driver’s licenses (in certain states) and vaccine cards.

Google Wallet does not offer P2P payments. So, since June, when Google discontinued Google Pay in the U.S., the company has not offered P2P payments in the U.S.

Besides its contention that the CFPB cannot exercise oversight based solely on complaints related to a discontinued product, Google also contended that the bureau offered thin evidence that Google Pay warranted supervision, saying that the 26 complaints the CFPB cited in its Friday announcement were “cherry-picked and unverified,” according to Google’s lawsuit.

The CFPB “made no effort to assess whether the quantity of complaints, even if they were verified, was significant or material in light of the number of transactions processed,” reads the lawsuit by Google. The company has not disclosed the specific number or volume of P2P transactions it processed, but the CFPB concluded in its complaint that the number was in the millions.

Google’s lawsuit is likely just one in a series of challenges to the CFPB’s authority, with more to come. Republicans have had the bureau in their crosshairs since 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act established the CFPB. Most recently, Elon Musk, a confidant to President-elect Donald Trump, called for the bureau to be “deleted.”

Additionally, the CFPB’s authorities beyond its supervision of Google are likely to be questioned in court. The Supreme Court’s decision this year in Natural Resources Defense Council v. Chevron overturned a major legal precedent requiring judges to defer to federal regulatory agencies’ interpretation of ambiguous statutes.

The bureau has a reputation for being more aggressive than others, and during the Biden administration, companies have not been shy about suing to challenge its regulations. With the court positioned to weigh in on yet more interpretations of the law by federal agencies, and with the nation’s high court likely to grow more conservative over the coming four years, the CFPB’s authority is likely to be curtailed in the coming years.