EC and CFPB Discuss AI and BNPL Risks for Consumers

US and European officials have initiated an «informal dialogue» to address consumer financial protection concerns, focusing on the increasing presence of Big Tech in payments, the use of AI in lending, and the rise of buy now, pay later (BNPL) services, according to Finextra.

Senior representatives from the European Commission and the Consumer Financial Protection Bureau (CFPB) have engaged in discussions regarding these three «priority areas,» aiming to exchange expertise and best practices while aligning their regulatory approaches.

The popularity of BNPL services has surged on both sides of the Atlantic in recent years, leading to concerns about potential over-indebtedness. The EC anticipates a significant increase in over-indebtedness over the next decade due to the rising prominence of BNPL offerings.

Simultaneously, regulators in the US and Europe have been addressing the growing influence of Big Tech in the financial sector, particularly in payments. Both the EC and CFPB have expressed antitrust concerns regarding Apple’s digital wallet.

Regarding AI, officials have deliberated on the differences and similarities in the legal and regulatory frameworks of each jurisdiction concerning consumer finance. They have also shared information on the various AI and automated decision-making applications being implemented by firms in their respective regions.

In a joint statement, CFPB Director Rohit Chopra and EC Commissioner Didier Reynders emphasized the importance of US-EU coordination on issues that transcend the Atlantic. They highlighted the need to ensure that consumers’ financial data and privacy are respected, not surveilled or misused; to maintain meaningful choices in competitive consumer finance markets; to prevent fraud and manipulation; and to provide consumers with the necessary tools to seek recourse in case of problems.