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The CFPB said customers of all three banks — JP Morgan Chase, Bank of America And Wells Fargo – Zelle has lost more than $870 million since its launch in 2017.
Zelle, a peer-to-peer payments network operated by bank-owned fintech firm Early Warning Services, allows instant payments to other consumers and businesses and has quickly become the largest such service in the country. has grown rapidly to become
“The nation’s biggest banks felt threatened by competing payment apps, so they rushed to take out Zelle,” CFPB Director Rohit Chopra said in a statement. “By failing to take adequate security measures, Zell became a goldmine for fraudsters, often leaving victims to fend for themselves.”
The suit is the CFPB’s latest move in the waning days of the Biden administration. It has taken many steps, including measures to limit credit cards Late fees And Overdraft chargeshas faced stiff opposition from banks and their trade groups. Corporations have succeeded in pushing back against regulators by choosing legal venues. Known as friendly According to challenging federal oversight.
Originally, JPMorgan said In August it said it was considering legal action against the CFPB if the regulator tried to punish the bank for its role in the Zelle network.
Zelle said in a statement on Friday that he was prepared to defend himself against the “baseless lawsuit”.
“Zelle leads the fight against scams and fraud and has industry-leading payment policies that go above and beyond the law,” said Jane Khodos, Zelle spokeswoman. “The CFPB’s misleading attacks will encourage criminals, cost consumers more in fees, squeeze small businesses and make it harder for thousands of community banks and credit unions to compete.”
This story is in progress. Please check back for updates.