(Reuters) – The U.S. consumer credit watchdog said on Friday it was ordering federal oversight of Google (NASDAQ:) Payment Corp., the internet giant's payments arm, a move that the company immediately declared that it would challenge it in court.
The Consumer Financial Protection Bureau announced the action, saying it had determined that the services offered by Google Payment posed a risk to consumers.
The regulator's move and subsequent lawsuit marked a struggle between the government and a Silicon Valley giant in the final weeks of President Joe Biden's administration. The regulator's decision could be reversed after President-elect Donald Trump returns to the White House in January.
Under Biden, the CFPB has taken a closer look at the growing financial services sector provided by Silicon Valley rather than traditional banks.
The agency cited nearly 300 consumer complaints, many involving reports of fraud, scams and unauthorized transactions. He said this constituted a finding that the company had committed wrongdoing.
The CFPB order nevertheless states that consumer complaints indicate that Google Payment failed to investigate complaints about erroneous transfers, among other potential violations, and that the law allows surveillance even if Google discontinued the services in question .
In a complaint filed after the CFPB's announcement, Google Payment Corp. said the regulator had relied on a small number of unsubstantiated complaints about a product it no longer offered.
“It stands to reason that a product that no longer exists is not capable of presenting such a risk,” the company’s complaint states.
The CFPB declined to comment on the lawsuit.
Financial regulators use confidential supervisory reviews to detect and correct violations of the law by companies.
Last month, the CFPB finalized new regulations subjecting technology companies to the same oversight as banks if those companies offer digital wallets and payment services.
The agency also persisted with rulemaking in the final weeks of the Biden administration, despite calls from Republican lawmakers to abandon it.
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