This cat-and-mouse game has long rankled tech leaders, but it has especially irritated Marc Andreessen, one of America’s most well-known investors and an outsize figure in the so-called fintech industry.
His firm has seeded eight companies since 2016 that landed in the crosshairs of the small watchdog agency that Congress created after the 2008 financial crisis to protect vulnerable consumers from exploitation, according to court records, agency documents and interviews with people familiar with the matters. Some of those inquiries have resulted in consent orders, fines and, for one company, a lifetime industry ban.
The CFPB exists to “terrorize finance, terrorize financial institutions, prevent fintech, prevent new competition, new startups that want to compete with the big banks,” Andreessen told podcaster Joe Rogan last year, invoking the agency as an example of government bloat ripe for the carving.
Of particular concern to Andreessen was federal regulators’ targeting of the freewheeling crypto industry under President Joe Biden — an effort that legal experts said would have planted a costly roadblock in the path of several companies’ rapid growth. The investor’s firm, Andreessen Horowitz, told the CFPB last year it planned to put more than $7 billion in crypto funds. So in the run-up to the 2024 presidential election, the longtime Democrat shifted his allegiance to Donald Trump, donating more than $5 million to groups supporting the Republican candidate, and even volunteered to help Elon Musk’s Department of Government Efficiency.
Ever since, Andreessen and others have seen their desires realized.
In short order, the Trump administration has hollowed out the CFPB — the primary regulator with jurisdiction over increasingly ubiquitous financial technology companies and the only one looking out for consumers in the rapidly expanding crypto marketplace. Lawsuits have been dropped, settlements have been renegotiated in favor of companies and a proposed consumer-friendly crypto regulation was killed outright.
Virtually all investigations have also ground to a halt, including three probes into Andreessen-backed companies, according to the records and the people familiar with the cases, who spoke on condition of anonymity to discuss sensitive matters. Among those frozen: inquiries into the popular cash advance app EarnIn and Point Digital Finance, one of the country’s largest providers of so-called alternative mortgages.
For those eager to reimagine a financial system free from regulation, the new approach is a boon.
But for the tens of millions of struggling Americans who rely on such apps for loans, cash advances and other financial products, it could be a bust, consumer advocates said.
“There are lots of ways that this breaks bad for families, and it all flows downstream from this moment we are now in,” said Mike Pierce, a former bureau official who now runs the advocacy group Protect Borrowers. “If there’s no watchdog, people are going to get hurt.”
Andreessen didn’t respond to a call or text and neither he, his chief of staff nor his firm responded to detailed emails seeking comment for this story.
Neither did the CFPB. But administration officials have defended their decision to shrink the bureau to a fraction of its size, arguing that the agency had engaged in the “weaponization” of consumer protection to the detriment of industry. They say the bureau should instead “focus on tangible harms to consumers,” relinquish oversight to states and reimburse defrauded consumers, rather than impose heavy fines on companies.
CFPB officials have been busy implementing the new approach, reworking deals with 20 businesses that had been accused of wrongdoing. In May, for example, they renegotiated a settlement with the international remittance firm Wise, an Andreessen-backed company that had previously agreed to pay $2 million to resolve claims that it had deceived its customers about the true cost of ATM fees. The new penalty: $45,000.
Wise didn’t admit or deny any of the bureau’s findings, court records show, and has said it “strongly disagrees with the CFPB’s characterization of Wise’s conduct.” A spokesperson declined to comment on the reduced fine amount.
This go-easy approach follows years of industry and political attacks on the CFPB. One Florida Republican in Congress likened the bureau in 2014 to the Nazi secret police, and industry groups have unsuccessfully challenged its constitutionality in cases that reached the Supreme Court twice in the past five years.
Still, as new financial technology like payment apps took off, the CFPB examined it. In 2016, as the Obama administration came to a close, the bureau took the digital payment network Dwolla to court for “deceiving consumers about its data security practices and the safety of its online payment system.” The Andreessen-funded company was ordered to pay $100,000 to the civil penalty fund and signed a consent order. That order ended in March 2021, and the company has made sure its marketing complies with the law, a company spokesperson said.
The scrutiny continued even during the first Trump administration. One such probe involved an Andreeseen-backed “buy now, pay later” app, though the investigation closed in 2020 without any enforcement action, bureau records show.
But the effort really gained momentum under Biden. According to a ProPublica analysis of CFPB data, 22 of the top 100 companies consumers complained about last year were fintech businesses, up from just seven a decade earlier.
It’s not clear exactly how much Andreessen’s business has invested in such companies, but the firm, which is also known by the nickname A16Z, has joined more than a dozen fundraising rounds over the past decade that generated hundreds of millions of dollars for eight enterprises that were subject to CFPB investigations, according to data compiled by PitchBook, an industry research publication.
Among those companies is LendUp Loans, an online startup app that was meant to disrupt the payday lending industry. The CFPB had taken the company to court three times in five years, alleging it had bilked its customers by hiding fees, misadvertising its credit scorekeeping or exceeding capped interest rates for military service members. When the CFPB barred the company from making loans in December 2021, the bureau’s director, Rohit Chopra, explicitly named Andreessen Horowitz in a press release, noting that the company had been “backed by some of the biggest names in venture capital.” The CFPB tapped $40 million from its civil penalty fund to compensate LendUp borrowers — and checks started going out to more than 118,000 customers last year.
LendUp didn’t admit or deny the CFPB’s allegations but shut down following its agreement with the agency.
More recently, in the final year of the Biden administration, bureau investigators seemed poised to examine not just a company’s actions but what its investors knew about them, records reviewed by ProPublica show.
In its EarnIn inquiry, for example, the bureau had designated the app’s “venture capital investors” as “relevant parties” to its probe because those investors “likely have knowledge” of the company’s business model and “associated documents,” according to the records. About two dozen firms have invested in EarnIn, including A16Z, which participated in two funding rounds in 2017 and 2018 that raised $164 million.
The company says it doesn’t charge interest on the cash it extends to people between paychecks but deducts what it calls “voluntary tips” upon repayment, the records show. The investigation was looking into whether EarnIn’s app effectively tricked as many as 200,000 customers into thinking that millions of dollars they paid in such fees went to help other customers when instead they went straight to the business’s bottom line, according to the records and people familiar with the case.
The probe stalled in February though, after Trump’s appointees to the CFPB issued bureauwide stop-work orders. Neither the company nor its top lawyer responded to an email seeking comment and a spokesperson didn’t return a call.
The enforcement freeze also effectively ended investigations into two other A16Z-backed ventures: Point Digital Finance and Greenlight Financial Technology Inc., a popular debit card for kids.
Beginning last fall, investigators started probing the former’s business model of buying a portion of a homeowner’s equity in exchange for a lump sum payment, records show. A recent CFPB industry report found that consumers had complained that they “felt frustrated or even misled about various aspects of home equity contracts.” The CFPB was looking into whether Point had deceived its customers about the true costs of its product, unfairly calculated repayment amounts or failed to follow the laws and rules that govern loans secured by a home, according to the records.
A spokesperson for Point Digital Finance declined to comment. A16Z participated in four funding rounds that raised more than $248 million for the company.
As for Greenlight, bureau investigators were examining whether the company had deceived parents about how quickly they could transfer money onto their kids’ prepaid debit cards, according to people familiar with the case and records reviewed by ProPublica. Though the company’s marketing materials said parents could “instantly” load money onto them, in reality the transfers took days — a delay that left children unable to pay for cabs, meals and other purchases, records and interviews with the people show.
Andreessen Horowitz had led a $260 million fundraising round in 2021 for Greenlight. The company didn’t respond to an email seeking comment and its chief of staff didn’t return a call.
Nikita Aggarwal, who teaches consumer finance at the University of Miami School of Law, said that a defanged and downsized CFPB would help companies like these save on compliance costs and grow faster — factors that would appeal to investors like Andreessen looking for a healthy return.
But she also said that the pursuit of the CFPB by DOGE should be understood as ideological since the agency was seen as a home for progressive Democrats who, especially during Biden’s administration, were skeptical of the fintech and crypto industries.
“If you can’t influence, just get rid of the regulator altogether,” Aggarwal said. “And that’s exactly what I think was happening in January and February when DOGE went in.”
To be sure, while the bureau is a shell of its former self, it hasn’t been entirely eliminated.
In August, the CFPB sued the Andreessen-backed banking software company Synapse Financial Technologies Inc., which had declared bankruptcy as the agency probed whether it lost track of millions of dollars in customer funds. But the action has so far resulted in little redress — the now-defunct company agreed to pay a $1 fine and it’s unclear whether the agency will tap its own funds to compensate consumers. A lawyer who represented Synapse didn’t return a call and email seeking comment and the company’s founder didn’t respond to a LinkedIn message.
When it comes to crypto, the industry’s influence under Trump represents a particularly relevant win for firms like those that are backed by Andreessen. The billionaire donated $33.5 million last year to a pro-cryptocurrency political group, more than six times as much as he did to support Trump, federal elections records show. And some A16Z investments have become major players in so-called decentralized finance, known as defi, which supporters hope will replace the traditional banking system.
So when the CFPB proposed a rule in 2023 that would have subjected these types of companies to bureau supervision, the firm pushed back, warning in a 2024 comment letter that some of the rule’s definitions were “overly broad” and could be subject to lawsuits. Absent “express legislative direction,” A16Z wrote, “we caution the Bureau against asserting expansive jurisdiction over digital assets.”
In a win for the industry, the bureau’s final agency rule excluded crypto.
But 10 days before Trump’s inauguration, the CFPB asked for the public’s input on another proposed rule that would have effectively subjected the industry to a 1978 law, putting the onus on virtual currency firms to make their customers whole in the event they are defrauded.
Such a rule could impose a major financial obligation on the companies given the frequency of hacks in the crypto industry. By one count, more than $2 billion in digital assets were stolen in 2022 alone.
As the Biden administration was ending, the top lawyer at Coinbase, the largest U.S. cryptocurrency exchange — and a recipient of A16Z investment dollars — posted on X that it was “obvious” that such a proposal “will never be adopted; it is DOA with the next admin and DOA in the courts,” he wrote, using the acronym for “dead on arrival.” He was right. In May, under Trump, the CFPB withdrew that rule, saying that it “does not align with current agency needs, priorities, or objectives.”
