The Consumer Financial Protection Agency told federal court on Tuesday it was withdrawing a lawsuit filed against three banks in December over processing payment services Zelle.
The agency, which was effectively shut down by President Trump last month, has accused JPMorgan Chase, Bank of America and Wells Fargo of failing to protect consumers from hundreds of millions of dollars of fraud.
Representatives from Early Alert Services, a joint venture of seven different banks operating CFPB, Wells Fargo and Zell Systems, did not immediately respond to requests for comment regarding the agency's litigation in Arizona Federal Court.
In a statement, JPMorgan said joint public and private sector efforts are needed to tackle fraud, and the bank looks forward to working with others “to effectively deal with these crimes.”
Bank of America declined to comment.
In an unprecedented move, the CFPB has now removed seven enforcement cases filed under former President Joe Biden, including one against Capital 1. Many other pending cases have been suspended in court.
On the last day of the Biden administration, CFPB accused EWS and three banks of putting Zelle services on the market to compete with apps such as PayPal's Venmo and Block's Cash app without implementing appropriate user safeguards.
Hundreds of thousands of consumers have since filed complaints about fraud, but as they were generally given denied assistance, they were also ordered to ask them to return the funds to the fraudster's allegations, according to the CFPB.
Trump says the CFPB should be eliminated, but government officials and government lawyers have maintained in court that the administration intends to run a “rationalized” CFPB in line with its legal obligations.
But employee unions and consumer advocates are stopping effectively blocking government agencies and preventing them from fulfilling their obligations under federal law in order to stop them from saying.
