Consumer Financial Protection Bureau Director Rohit Chopra will work with his European counterpart on how digitalization affects financial services and its consumers, the two regulators announced Monday.

Chopra will have regular “informal dialogues” with Didier Reynders, the European Union’s commissioner for justice and consumer protection, on developments — from pricing to privacy — that significantly affect businesses and households, according to a Monday statement.

The CFPB and the European Commission will focus on exchanging technical knowledge to improve policy and regulatory issues. The dialogue will also address risks to consumers from buy now, pay later platforms, including over-consumption and over-indebtedness.

Digital transformation should also ensure accessible financial services to the unbanked, underbanked and consumers wanting to protect their data, the regulators said.

“These developments, if left unchecked, 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 regulators said. “Policymakers on both sides of the Atlantic are responding to these issues, but we must do more to compete with the pace of evolving markets and consumer needs.”

Chopra and Reynders will meet at least once every year with bilateral meetings between senior staff and subject matter experts, as well as roundtables involving stakeholders and industry representatives. While certain subjects can be discussed publicly, the agencies noted some might warrant a more private discussion.

The initiative will be running parallel “with other forms of cooperation and exchanges between the European Union and the United States on various digital and financial services policies and regulation,” the joint statement said.

Chopra has been vocal about the impacts of technological innovations in the financial sector.

Last month, he highlighted the problems customers face when advanced technologies like artificial intelligence affect their experience as they turn to banks for assistance with financial products and services. Roughly 37% of Americans interacted with a chatbot in 2022 to pay bills, look up recent transactions, or for other services, but the number is expected to grow, according to the CFPB.

“To reduce costs, many financial institutions are integrating artificial intelligence technologies to steer people toward chatbots,” Chopra said at the time. “A poorly deployed chatbot can lead to customer frustration, reduced trust and even violations of the law.”

The CFPB, in its BNPL report in September, identified concerns with consumers overextending themselves while companies engaged in data harvesting.

By Rajashree Chakravarty on July 18, 2023
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