CFPB veteran Fuchs takes on new legal challenges at Plaid
Plaid has hired a former general counsel of the Consumer Financial Protection Bureau to fill the same post at the data aggregator.
Meredith Fuchs succeeded Ben Lee, who left Plaid earlier this year to join Reddit.
Fuchs has an unusual resume, with experience in government and financial services. She was recruited to the CFPB by Elizabeth Warren and reported to work the same day as Richard Cordray, the bureau's first director. She served as chief of staff for both Warren and Cordray and was the CFPB's general counsel from 2012 to 2016, a stint that included six months as acting deputy director.
Fuchs has held roles as chief investigative counsel of the House of Representatives Committee on Energy and Commerce, as vice president and general counsel at the National Security Archive at George Washington University and as a partner at Wiley, Rein & Fielding.
When she left the CFPB, Fuchs became chief counsel, enterprise regulatory at Capital One Financial.
In an interview, Fuchs shared her views on some of the data-sharing questions that data aggregators like Plaid are grappling with at a time when the CFPB plans to issue rules about the issue and as Plaid prepares for its sale to Visa. Here is an edited transcript.
What attracted you to Plaid?
MEREDITH FUCHS: I have worked on consumer issues for most of my career. I was lucky to help build the CFBP and work at a bank that prioritizes great services for its customers. Moving to Plaid is a chance to help push the industry to an era when consumers are fully empowered to access individualized product and services.
When you were at Capital One, you must have squared off against Plaid from time to time.
There definitely is some history between banks and data aggregators like Plaid. But four years ago, when these kinds of issues started to surface, was a very different time than where we are today. Back then, there was a lot of unease and uncertainty within banks about what the aggregators were about, what they would do with data. I think banks wanted to protect their own customers, but also wanted to protect their relationships with consumers.
A lot has changed that portends a brighter future in those relationships. For one thing, the data aggregators have matured in terms of their understanding of the banks’ obligations. Banks have been able to see in practice how these data aggregators are doing their work and that they can do business with aggregators.
You can't really slow down what consumers want: great products to help them with their needs. People don't have the patience for products and services designed for someone else. Consumers are demanding progress and the banks recognize that. It's become much more of a partnership. I'm not saying that it's always smooth sailing. There's probably still work to be done across all of these relationships, but it's a lot more like a partnership than it was four years ago when I first learned about Plaid.
What do you think of the CFPB’s plan to create rules around data sharing?
I think it's going to help bring some clarity about consumers' control over their own data. There's no question consumers should be able to get access to what they want and use it the way they want.
Should there be some restrictions on the amount of data aggregators should be able to collect and how they use it?
The issue comes back to consumer choice. What we should be building into the system is transparency. Allowing consumers to decide what companies they want to share with and what companies they want to block, that kind of thing. In the fintech world, a lot of companies are learning that they need to build that in because consumers are pretty sophisticated and understand the risks but also the value of their information. If we can do a good job as an industry of making sure there's transparency and choice, that is going to help substantially.
Banks, fintechs and data aggregators have different views on the proper stewardship of consumers' bank account data. Where do you stand? Where should the lines be drawn around who gets to look at, store and use customer data?
Banks feel a couple of pressures. One is the security and privacy expectations that the Gramm-Leach-Bliley Act puts on them. They also want to control the data because they think it's useful for their businesses and they don't want other businesses to be able to get the same insights they have, especially if there's a risk it would disclose the bank’s confidential information. That's perfectly reasonable from the perspective of a rational business, but the law says consumers own their own data. The reason is because, in the lead-up to Dodd Frank, it became clear that the stranglehold banks had on financial data was making it hard for consumers to move from one provider to another, to choose the best product for themselves.
So the old view doesn't make sense anymore. The thing that everyone is worried about, and what banks first worried about, is that aggregators are going to collect all the data that's out there and then they're going to sell it. The Plaid business model doesn't depend on selling the data or using the data to get something out of a consumer. It’s an intermediary. When the consumer says they want their data to be shared with an application so they can get a service, Plaid makes it possible for that data to be shared with the application. We don’t need to sell or manipulate the data to run our business.
Are you working on Plaid’s pending sale to Visa? Any thoughts on what Plaid might look like post-merger?
It's a really exciting possibility and I'm certainly hopeful it will go through. Plaid is largely a domestic company, although we have operations in the U.K. and in the Netherlands. If the Visa merger happens, it's going to provide help for Plaid to go further around the globe more quickly. Some of those other jurisdictions have open banking regimes, and that's the perfect scenario for the technology Plaid creates.
Even though Plaid will obviously become a subsidiary of Visa, the idea is that Plaid will continue to operate independently as much as possible. And the rationale behind that is Plaid is focused on innovating in technology and developing technology. I think Visa wants to preserve Plaid’s ability to be innovative and develop great products.