The Consumer Financial Protection Bureau on Friday sued the operator of the Zelle payments network and the three U.S. banks that dominant transactions on it, alleging that the firms failed to properly investigate fraud complaints or give victims reimbursements.
The CFPB said customers of the three banks — JPMorgan Chase, Bank of America and Wells Fargo — have lost more than $870 million since the launch of Zelle in 2017.
Zelle, a peer-to-peer payments network run by bank-owned fintech firm Early Warning Services, allows for instant payments to other consumers and businesses and has quickly surged to become the biggest such service in the country.
“The nation’s largest banks felt threatened by competing payment apps, so they rushed to put out Zelle,” CFPB Director Rohit Chopra said in a statement. “By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves.”
Zelle said in a statement Friday that it was prepared to defend itself against this “meritless lawsuit.”
“Zelle leads the fight against scams and fraud and has industry-leading reimbursement policies that go above and beyond the law,” said Jane Khodas, a Zelle spokeswoman. “The CFPB’s misguided attacks will embolden criminals, cost consumers more in fees, stifle small businesses and make it harder for thousands of community banks and credit unions to compete.”
This story is developing. Please check back for updates.
