US consumer watchdog sues banks over alleged ‘widespread’ fraud on Zelle
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Lawsuit is part of CFPB’s aggressive agenda in reported bid to advance protections before Trump overhauls agency. The US Consumer Financial Protection Bureau said on Friday it filed a lawsuit against JPMorgan Chase, Bank of America and Wells Fargo for failing to protect consumers from alleged “widespread fraud” on the payments platform Zelle.
The lawsuit was initiated as the watchdog moves ahead with an aggressive agenda in the final weeks of Joe Biden’s Democratic administration in a bid to advance consumer protections before Donald Trump overhauls the agency, said three people familiar with the agency’s thinking. The moves defy congressional Republicans, who have called for agencies to cease rulemaking.
The CFPB seeks to stop the alleged unlawful practices, secure redress and penalties, and obtain other relief for consumers, it said in a statement. “What they built became a goldmine for criminals,” making it easy for fraudsters to drain accounts, while providing insufficient protections for consumers or making them whole for losses, the CFPB director, Rohit Chopra, told journalists in a briefing. “These banks broke the law by running a payments system that made fraud easy, while refusing to help the victims.”.
The proliferation of fraud and scams on Zelle has attracted attention from US lawmakers, including the Democratic senator Elizabeth Warren and regulators concerned about consumer protection. “The CFPB’s attacks on Zelle are legally and factually flawed, and the timing of this lawsuit appears to be driven by political factors,” said Early Warning Services, the company that operates Zelle and is jointly owned by banks.
