The US Consumer Financial Protection Bureau (CFPB) has brought new accusations of fraud against three of the largest banks in the country – Bank of America, JPMorgan Chase, and Wells Fargo. The allegations involve Zelle, a popular money transfer app co-owned by these seven major banks.
According to the CFPB, more than $800 million was swindled from clients using Zelle, with scammers often exploiting the system to defraud individuals. The complaint argues that banks should be held responsible for reimbursing losses incurred by customers who voluntarily transfer money out of their personal accounts.
The CFPB’s director, Rohit Chopra, said that Zelle has become a “gold mine for criminals,” allowing them to quickly move money while making it difficult for customers to get their money back. The lawsuit is the latest in a series of actions by the consumer bureau, which has faced criticism from Republicans who argue it is anti-business.
The administration’s decision to sue only three banks, despite seven co-owning Zelle, was not explained by CFPB officials. However, they did note that more than 70 percent of payment activity on Zelle occurs through these three banks. The lawsuit has been deemed “legally and factually flawed” by Zelle’s spokeswoman, who also suggested the timing is driven by political factors.
The case highlights concerns about the responsibility of banks in preventing scams on their platforms, particularly in light of recent government shutdown threats and regulatory actions.
Source: https://www.nytimes.com/2024/12/20/business/zelle-fraud-chase-wells-bank-of-america.html