Chinese-Style Payment Structure could Exploit Your Financial and Personal Data

It’s kind of creepy to think every time you swipe your credit card or click on a buy button online that from that point on your every move is monitored. This is the Orwellian big brother that not only profits from your data points but uses this to build a social profile that categorizes you in ways that you are certainly unaware of.

I’m sure the average American has no idea what I’m speaking of, and probably doesn’t care anyway. Perhaps one day down the road you decide to purchase a gas guzzling carbon emitting pickup truck instead of a Toyota Prius. No big deal.

But now you have been labeled and databased non-green and are put into a watch list of possible individuals who are undermining the government’s efforts to end global warming. One day there’s a knock at your door and two government agents are there to arrest you for terrorist acts and crimes of nature. All you wanted to do was buy a vehicle to tow your boat.

The scenario is a bit draconian presently, but Big Tech et al is working feverishly to bring such nightmares to life. China is the canary in the coal mine.

Consumer Financial Protection Bureau Director Rohit Chopra warned lawmakers recently that the U.S. payments industry is developing a “Chinese-style” market structure in which large technology companies leverage consumer data to power their financial-services subsidiaries.

According to Chopra, “The United States is lurching toward a market structure where finance and commerce commingle, fueled by uncontrolled flows of consumer data.” What makes this all the more sinister is the ease of crossover from financial data to social ideas.

Chopra goes on to say, “Over the last several years Chinese tech and finance giants have developed so-called social scores that go beyond credit performance and relies on analyzing user habits unrelated to credit and banking.”

It’s really smoke and mirrors as to what and how these big tech companies actually do with our data because such minute information is not required currently by the SEC, the CFBP, or other U.S. regulators. However, as Chopra has indicated, this may be changing. The CFBP has sent out query orders to Amazon, Apple, Google, Facebook, PayPal, and Square. You may have heard of them.

Their counterparts in China, WeChat, and Alipay will also be studied by the CFBP, but are not subject to regulation under U.S. law. As Chopra mentions, “Little is known publicly about how Big Tech companies will exploit their payments platforms.

For example, will the operators engage in invasive financial surveillance and combine the data they collect on consumers with their geolocation and browsing data?”

One has to give kudos to the regulators for conducting these types of investigations, but is it me or does nothing ever really change. We have witnessed Zuckerberg, et al dragged in front of Congress for years for any number of legal and ethical violations, but nothing ever changes and these guys don’t go away, they just seem to get bigger.

Our consumer’s insatiable need for their services and products unwittingly adds fuel to the fire as equity prices and market caps continue to go to the moon. Do you wonder sometimes why all of these unbelievable services are free? You can find the answer to any question in the world on Google for no charge. If you use, for example, a particular social network free of charge, your personal and sometimes very private information ends up being the product itself.

There are actually a handful of platforms that will pay you for the use of your data, but they are small and require you to make the effort and have a decent amount of computer savvy.

Perhaps I’m being a bit too cynical because it does take time to get to the root of this evil. The CFBP investigation is overlapping with the ongoing FTC tech antitrust efforts spearheaded by FTC Chair Lina Khan. Recent actions are already drawing applause from antitrust advocates, including the American Economic Liberties project.

One thing we know for sure is that if you give big tech and the rabid left too much leash you can expect the unexpected. One only hopes it doesn’t go down the road of a Chinese-style payment structure. In China, we can already see the long-term implications of these forces. Alipay and WeChat are deeply embedded into the lives of the Chinese public, combining messaging, e-commerce, and payment functionality into super-apps.

In such a market, consumers have little choice but to use these apps and little market power to shape how their data is used.

So how does this all end? Probably somewhere between Orwell and Huxley’s dystopia to some kind of benign system that currently functions. Facebook et al are dug in deep and aren’t going to budge if not pressured, as they desperately need such data to fuel growth.

In 2020, Facebook generated $62.23 per user in the United States and Canada from advertising. Others are more optimistic and believe that all of the past data hacks have opened the eyes of consumers who want their personal information protected, and if they could be compensated for it all the better.

UncategorizedWorld & U.S. News