CFPB to Collaborate with Startups BillGuard, Plastyc and Simple

In an effort to foster innovation, the Consumer Financial Protection Bureau is reaching out to work with financial services startups.

The so-called Project Catalyst makes good on the government agency's promise to use data to track market trends.

The first three companies to be involved in the project are: BillGuard, a New York startup that flags fraudulent charges on its users’ credit cards; Plastyc, a prepaid card provider that targets the underbanked; and branchless-bank Simple (formerly BankSimple).

"We clearly understand that innovators are often the first to notice" trends, said CFPB Director Richard Cordray, during a press conference in Mountain View, Calif. They are "the first to note consumer needs."

He said that the CFPB is dedicating a portion of its website to outreach to startups and financial technology entrepreneurs. Among other tenets of the project is a focus on data sharing and disclosure testing.

"How [do] those ideas function in the marketplace, we want to learn more," says Cordray. "So we can bring as much working world data [into our efforts]."

Any data that the CFPB shares with outsiders, he stressed, will be scrubbed of personal identifying information. The CFPB will then analyze the data as appropriate.

"For instance, Simple and Plastyc will be providing data about when and how consumers seek to access their transaction data and whether goal-setting tools can encourage savings as well as how analytics-driven answers can decrease consumer confusion and call volume," a CFPB spokeswoman wrote in an email. "We are also gathering data from Billguard to help us understand trends around billing disputes."

The CFPB doesn't expect that its collaborations will be limited to startups, according to a statement sent to Bank Technology News. The project is also targeting its outreach to entrepreneurs, innovators, and the folks that work with them, that spokeswoman wrote.
 
BillGuard chief executive Yaron Samid said his company has been working with the CFPB for several months.

"We started working with them with us getting data from their consumer complaint database," he said, adding that within those complaints the No.1 issue is billing disputes. "We are using that data to supplement our national database."

BillGuard, Samid said, is also sharing data with the CFPB.

"It's bidirectional," he said. "Together we are analyzing which charges are confusing."
Samid adds that there is another "level of collaboration" between BillGuard and the federal government that is yet to be announced.

And the CFPB will be working closely with all of the companies involved in the project, said Simple's chief executive Joshua Reich, in a blog post.

"As CFPB Director Richard Cordray outlined during the event this morning, Simple will be collaborating with and working alongside the Bureau on Project Catalyst, an initiative designed to support consumer-friendly innovation and entrepreneurship in the marketplace," he wrote. "Through Project Catalyst, the CFPB will engage more closely with companies and entrepreneurs who are at the front lines of innovation."
 
A voice message left for Plastyc's chief executive Patrice Peyret was not immediately answered.
 
Already, the CFPB is working with the Federal Housing Finance Agency to track mortgages.
 
Earlier this month, the two said they were creating a first-of-its-kind mega-database that contains information in support of policy making research.
 
And in October, the CFPB announced that it was taking its consumer complaint database out of its "beta" version and formally launching the service.
 
"We need to, as a bureau, broaden our view in the way that we are looking beyond existing business lines," said Deputy Director Raj Date, who intends to resign at the beginning of next year from the agency, during the press conference. "The existing regulatory apparatus was built to deal with existing projects, but that means that new products don't fit the regulatory apparatus that exists today. We need to make sure that we shift beyond historical problems."