In a Vain Search For Purpose, the CFPB Sniffs Around Payments
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Well into the 2000s American Airlines was compensating customers to the tune of 500 airline miles per ticket booked on the airline’s website. How things change. And in a big way.

Indeed, it’s so easy to forget how behaviorally different consumers were not too long ago. American wasn’t paying its passengers with miles because the airline wanted to create liabilities, rather the miles were a reward meant to break a deeply ingrained, and expensive-for-the-airlines consumer habit.

As recently as the late 1990s, the U.S. Postal Service was the “last mile” as it were when it came to completing business transactions. Whereas “the check is in the mail” has telephone-booth connotations today, as the 20th century came to a close it loomed large on the transaction front.

What changed? The simplest and truest answer is that Amazon changed everything. Against all odds, Amazon profoundly altered how Americans (and the world) purchased goods and services. Entrepreneurs are by their very name trying to rush a very different future into the present, and Jeff Bezos showed us the genius of purchasing the world’s plenty with a click of a mouse.

All of this comes to mind as the Consumer Financial Protection Bureau (CFPB) noses its way into the payments processes of Amazon, Apple, Facebook, Google, PayPal, and Square. The sniffing by the regulator is rooted in fear that Amazon and other inventors of the future might “abuse” so-called “market power” attained by meeting our needs in ways we never imagined having them met. Translated for those who require it, some of the world’s most valuable corporations face regulatory harassment for having led their customers to a much better place.

The initial, gut reaction here is that as opposed to investigating these businesses, CFPB officials should be showering them with praise for their unparalleled work when it’s come to achieving impressive outcomes for the consumer. After all, the CFPB bills itself as responsible for “consumer protection,” and the valuations of the companies in the spotlight indicate that they’ve done much more than protect consumers. See above.

Of course, the challenge for the CFPB when it comes to heaping praise on the “unreasonable hospitality” of the companies mentioned is that any praise would be excess. Figure that the markets have already spoken on the matter, after which the loudest praise of Amazon et al has to be just how much faster, safer, and different transactions are today. Whereas nowadays orders completed online can be fulfilled in time measured in seconds and minutes, in the past a purchase order could take weeks to fulfill. In other words, corporate valuations confirm what we consumers already know.  

Yet the CFPB’s leading lights aren’t sniffing around in order to offer praise. Their investigations are rooted in the companies mentioned doing things untoward and abusive thanks to “market power” previously attained. The investigation vandalizes common sense simply because common sense tells us companies that gained remarkable market share against extraordinarily long odds wouldn’t proceed to abuse the customers they worked so feverishly to win in the first place.

Alas, CFPB officials express fear that having won sizable market share with great service, the companies mentioned might act in harmful fashion, particularly on the matter of customer data gathered. Actually, the desire to get to know one’s customer is as old as business is, and for obvious reasons: businesses don’t prosper based on one sale; rather their success is a function of repeat business. Amazon et al are plainly trying to know their customers well so that they’ll remain customers.

After which, it cannot be stressed enough that the companies under CFPB fire weren’t always the giants they presently are. This simple truth is seemingly lost on CFPB officials, but it’s a truth that actual businesses don’t have the luxury to ignore: stated simply, the remarkable success of the companies being investigated is the surest sign that there are enormously well-funded commercial unknowns presently searching for ways to improve on the unreasonably innovative service that lifted Square et al in the first place.

Looked at another way, it’s lost on everyone but Amazon, Apple, Facebook, Google, PayPal, and Square that their future success is far from a foregone conclusion. Since it’s not, they’re working endlessly to find what the future of payments is so that they can be first to it. If they’re not, their days could be numbered.

Too bad the CFPB’s days aren’t numbered. Talk about a bureaucracy in search of a purpose.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors ( His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution.

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