The U.S. Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against JPMorgan Chase, Bank of America, and Wells Fargo for failing to protect consumers from “pervasive fraud” on their Zelle payments platform. Ta.
Early Warning Services, which developed and operates Zelle, is also named in the lawsuit.
It is jointly owned by Bank of America, Capital One, JPMorgan Chase, PNC Bank, Trust, US Bank, and Wells Fargo.
The CFPB alleges that since Zelle launched in 2017, customers at three banks have suffered losses of more than $870 million due to inadequate fraud prevention and detection measures.
Zelle facilitates electronic money transfers using a linked email address or US-based mobile phone number.
According to ReutersZelle serves more than 143 million consumers and small businesses.
“The nation's largest banks, feeling threatened by competing payment apps, rushed to launch Zelle,” CFPB Director Rohit Chopra said in a statement. Without proper safeguards, Zelle became a gold mine for scammers, while leaving victims to fend for themselves. ”
The CFPB claims that Zelle's limited identity verification methods enable fraud and make it easier for bad actors to create accounts and target users.
Despite receiving numerous fraud complaints, the defendant bank allegedly failed to use this information to prevent further fraud.
The CFPB also accuses Zelle Network of violating its rules by not reporting fraud incidents consistently or promptly.
Additionally, the bank violated federal laws, including the Electronic Funds Transfer Act and Regulation E, by failing to properly investigate Zelle customer complaints and taking appropriate action against certain types of fraud and errors. claims to have done so.
Data from Early Warning shows that fraud incidents fell by nearly 50% in 2023, even as transaction volumes increased by 27%.
“As a last resort to pursue political objectives, the CFPB is now overstepping its authority by holding banks criminally liable,” a JPMorgan spokesperson said in a statement to Reuters.
“This is a spectacular demonstration of enforcement regulation, bypassing the necessary rulemaking process.”
“We strongly oppose the CFPB's efforts to impose significant new costs on the 2,200 banks and credit unions that provide free Zelle services to their customers,” a BofA spokesperson said, according to the news agency. It is said that
Wells Fargo declined to comment for this story.
“CFPB sues JPMorgan, BofA, Wells Fargo over Zelle fraud prevention failures” was originally written and published. Retail Banker Internationala brand owned by GlobalData.
