CFPB Director Rohit Chopra testifies during a Senate Banking, Housing, and Urban Affairs Committee hearing titled “The Consumer Financial Protection Bureau's Semiannual Report to Congress,” in the Dirksen Building on November 30, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
The Consumer Financial Protection Bureau on Friday filed a lawsuit against the operator of the Zelle payments network and the three U.S. banks that control transactions on it, alleging that the companies failed to properly investigate fraud complaints or compensate victims.
The CFPB told clients of the three banks – JPMorgan Chase, Bank of America and Wells Fargo – It has lost more than $870 million since launching Zelle in 2017.
Zelle, a peer-to-peer payments network operated by bank-owned Early Alarm Services, allows instant payments to consumers and other businesses and has quickly risen to become the largest service of its kind in the country.
“The nation’s largest banks felt threatened by competing payment apps, so they rushed to roll out Zelle,” CFPB Director Rohit Chopra said in a statement. “By failing to put proper safeguards in place, Zelle has become a goldmine for scammers, while often leaving victims to fend for themselves.”
Zelle said in a statement on Friday that it is prepared to defend itself against this “baseless lawsuit.”
“Zelle leads the fight against scams and fraud and has industry-leading payment policies that go beyond the law,” said Jane Khudas, a Zelle spokeswoman. “The CFPB’s misleading attacks will embolden criminals, cost consumers more in fees, stifle small businesses and make it difficult for thousands of community banks and credit unions to compete.”
This story is evolving. Please check back for updates.
