CFPB Director Rohit during a Senate Banking, Housing, and Urban Affairs Committee hearing entitled “Consumer Financial Protection Bureau Semiannual Report to Congress” held at the Dirksen Building on November 30, 2023.・Mr. Chopra testifies.
Tom Williams | Cq-roll Call Inc. | Getty Images
The Consumer Financial Protection Bureau on Friday charged the operator of the Zelle payment network and three U.S. banks that control transactions on the network, alleging that the companies failed to properly investigate fraud complaints and refund victims. .
The CFPB said the three banks’ customers: JP Morgan Chase, bank of america and wells fargo — Zelle has lost more than $870 million since its launch in 2017.
Zelle is a peer-to-peer payments network run by bank-owned fintech company Early Warning Services that enables instant payments to other consumers and businesses and has quickly grown to become the largest such service in the country.
“The nation’s largest banks rushed to implement Zelle because they felt threatened by competing payment apps,” CFPB Director Rohit Chopra said in a statement. “By not taking proper safeguards, Zelle became a gold mine for scammers, while leaving victims to fend for themselves.”
The lawsuit is the latest move by the CFPB in the waning days of the Biden administration. Many of the measures the bank has taken, including measures to limit credit card late fees and overdraft fees, have faced fierce opposition from banks and their industry groups. Companies have successfully fought back against regulators by choosing favorable venues for lawsuits challenging federal oversight.
In fact, JPMorgan said in August that it was considering legal action against the CFPB if regulators sought to punish it for its role in the Zelle network.
Zelle said in a statement Friday that it stands ready to defend against the “unfair lawsuit.”
“Zelle is leading the fight against fraud and fraud and has industry-leading reimbursement policies that go above and beyond the law,” said Zelle spokeswoman Jane Cordas. “The CFPB’s misguided attack will embolden criminals, increase the burden of fees on consumers, squeeze small businesses, and make it harder for thousands of community banks and credit unions to compete.”
This story is developing. Please check back for the latest information.
