Bank of America Considering Legal Action Over Zelle Inquiry

(Reuters) – Bank of America announced on Tuesday it is evaluating potential litigation concerning a U.S. consumer watchdog’s inquiry into the bank's fund processing through the Zelle payment app.

The Consumer Financial Protection Bureau (CFPB) has initiated discussions with Bank of America to seek a resolution to the inquiry or to file an enforcement action, as stated in a regulatory filing by the bank.

Due to the rise in fraud and scams on Zelle, U.S. lawmakers, including Democratic Senator Elizabeth Warren, have expressed concerns over consumer protection.

Since its launch in 2017, Zelle has become the leading peer-to-peer payment network in the U.S. and is owned by seven major banks, including JPMorgan and Bank of America.

"The corporation is evaluating next steps, including litigation," BofA stated.

In August, JPMorgan mentioned it was also considering whether to sue the CFPB regarding inquiries into Zelle. Previously, Wells Fargo disclosed that regulators were investigating how the bank managed customer disputes via Zelle.

Furthermore, Bank of America revealed it has been engaging with several federal regulators concerning various aspects of its Bank Secrecy Act/anti-money laundering (BSA/AML) and sanctions compliance programs. BSA refers to a set of U.S. laws and regulations aimed at combating money laundering and terrorism financing.

BofA plans to continue enhancing its compliance programs in cooperation with regulators, asserting that these issues are not expected to have a "material adverse" financial impact on the bank.

The bank continues discussions with regulators, with a resolution of the inquiries potentially resulting in one or more public orders from the regulators.

Last month, a U.S. banking regulator found that Wells Fargo’s safeguards against money laundering and other illegal transactions were inadequate, thus restricting the bank's ability to expand in high-risk sectors.