EC and CFPB Discuss Protecting Consumers from the Risks of AI and BNPL
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Officials from the US and Europe have been discussing ways to protect consumers amid a rise in technology use in payments.
The officials are discussing the impact of technologies like artificial intelligence (AI) and the increased adoption of the buy now, pay later (BNPL) model.
US And EU Officials Discuss Technology Impact on Financial Consumers
The discussions held involved the European Commission and the Consumer Financial Protection Bureau (CFPB). The officials from these departments have been holding discussions to discuss the three controversial “priority areas.”
These officials seek to share their expertise on different matters. They are also looking to improve practices used in the industry while coordinating approaches to create an all-around solution.
One of the issues that these officials will be looking at is the buy now pay later (BNPL) Model that has been amassing interest in multiple countries. The growing popularity of this model has raised concerns of over-indebtedness.
The European Commission anticipates that the popularity of this model will increase significantly over the next decade. Therefore, there is a need for regulatory intervention to ensure that consumers who rely on this method will have the best experiences.
Concerns over Big Tech Role in Finance
Another issue that regulators are discussing is the adoption of Big Tech in finance. There are concerns about how advancements in the technology sector are affecting areas such as payments.
The European Commission and the CFPB have previously raised antitrust concerns about Apple’s digital wallet. The wallet is gaining much popularity in the online payments sector, with the over-reliance now posing significant risks.
Officials are also addressing AI technology saying there are similarities and differences in the legal and regulatory frameworks that are used to govern this technology concerning consumer finance. There are also concerns about the shared information on the types of AI and how firms can use automated decision-making.
While speaking on this development, the CFPB director, Rohit Chopra, and the EC Commissioner, Didier Reynders, opined that it was vital that the US and the EU work together. The commissioner noted that collaboration was needed to address the issues that might arise.
“It is critical for the US and EU to coordinate on the firms, products, consumer trends, and risks that span the Atlantic,” Chopra said. “Our staff has shared expertise, best practices, and lessons learned on an important set of issues.”
They further noted that working together could help guarantee that consumers in the Atlantic can enjoy more privacy with their financial data. Such data should not be monitored or misused.
There is also the need to retain meaningful choices when it comes to competitive financial markets. Doing so will help avoid instances of market fraud and manipulation. Firms will also have all the tools they need to mitigate risk.
