CFPB sues three large banks over payments platform Zelle
The Consumer Financial Protection Bureau has filed a lawsuit against Bank of America, JPMorgan Chase and Wells Fargo, along with Early Warning Services, that alleges the companies failed to protect consumers from fraud.
The bureau claims that the banks’ customers have lost more than $870 million through Zelle in the past seven years. The CFPB alleges that Early Warning Services, which operates Zelle, rushed the platform to market with insufficient safeguards.
“The nation’s largest banks felt threatened by competing payment apps, so they rushed to put out Zelle,” CFPB Director Rohit Chopra said in a statement. “By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves.”
BofA disclosed in October that it was responding to a CFPB inquiry tied to the processing of electronic payments through Zelle. Two months earlier, JPMorgan warned that it could file a lawsuit against the bureau if it issues an enforcement action against the bank tied to Zelle-related transfers.