The Consumer Financial Protection Bureau (CFPB) has sued the operator of the Zelle payments network and three major US banks, JPMorgan Chase, Bank of America, and Wells Fargo, alleging that they failed to properly investigate fraud complaints or give victims reimbursement. The CFPB claims that since the launch of Zelle in 2017, customers have lost over $870 million due to fraudulent transactions.
The agency accuses the banks of not having adequate systems in place to detect and prevent scams on Zelle, allowing criminals to exploit the platform for personal gain. The CFPB director, Rohit Chopra, stated that the banks’ failure to implement proper safeguards has left victims “fending for themselves” and enabled fraudsters to thrive.
The suit is part of a broader effort by the CFPB to regulate the financial sector, which has faced criticism from lawmakers and industry groups in recent years. The three major banks had previously expressed concerns about Zelle’s impact on their business, with JPMorgan even considering litigation against the CFPB if it pursued action against the bank.
Zelle’s operator, Early Warning Services, has dismissed the lawsuit as “meritless” and claimed that the $870 million figure cited by the CFPB is misleading. The company asserts that it has taken steps to reduce scams on the platform, with reports of fraudulent transactions falling almost 50% in 2023.
The CFPB seeks to force the banks to stop their allegedly unlawful practices around Zelle and pay an unspecified amount in penalties. The agency’s actions have been met with resistance from industry groups, who argue that such regulations would unfairly stifle competition and increase costs for consumers.
Source: https://www.cnbc.com/2024/12/20/cfpb-sues-jpmorgan-chase-bank-of-america-wells-fargo-over-zelle-fraud.html