CFPB Sues Chase, Bank of America and Wells Fargo
The Consumer Financial Protection Bureau (CFPB) filed a complaint Friday against three of the country’s largest banks and the operator of Zelle “for allowing fraud to fester”.
CFPB says that Bank of America, JPMorgan Chase and Wells Fargo failed to safeguard the Zelle network from fraud and other defects, which resulted in more than $870 million in consumer losses.
Zelle is owned by Early Warning Services, LLC, a financial tech company and consumer reporting agency that is co-owned by seven of the largest U.S. banks, including the three mentioned in this suit. EWS designed and operates the Zelle network and app, which is now the most widely available peer-to-peer payment network in the United States.
The CFPB alleges that the defendants violated the Consumer Financial Protection Act’s (CFPA) prohibition on unfair acts or practices by failing to take timely, appropriate, and effective measures to prevent, detect, limit, and address fraud on the Zelle Network.
The complaint also says that Bank of America, JPMorgan Chase, and Wells Fargo violated the Electronic Fund Transfer Act and its implementing Regulation E for failing to conduct reasonable investigations of notices of errors submitted by consumers regarding Zelle transactions; and failing to properly treat incorrect and unauthorized Zelle transfers as errors under the law.
The Bureau seeks, among other things to bring the defendants into compliance with the law, consumer redress, and civil money penalties.
Zelle Says Lawsuit is Meritless
Zelle called the lawsuit meritless in its own press release today.
“The CFPB’s attacks on Zelle are legally and factually flawed, and the timing of this lawsuit appears to be driven by political factors unrelated to Zelle,” said Jane Khodos, Zelle spokesperson. “Zelle leads the fight against scams and fraud and has industry-leading reimbursement policies that go above and beyond the law. The CFPB’s misguided attacks will embolden criminals, cost consumers more in fees, stifle small businesses and make it harder for thousands of community banks and credit unions to compete. Zelle is relied upon by 143 million enrolled American consumers and small businesses, and we are fully prepared to defend this meritless lawsuit to ensure their service does not suffer”.
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