Lawsuit Filed Against Major Banks Over Zelle Fraud

By Manya Saini

Reuters – The U.S. Consumer Financial Protection Bureau (CFPB) announced on Friday the filing of a lawsuit against JPMorgan Chase (NYSE:JPM), Bank of America, and Wells Fargo (NYSE:WFC). The lawsuit alleges these banks failed to protect consumers from "widespread fraud" occurring on the payments platform Zelle.

The CFPB aims to:
– Stop alleged unlawful practices
– Secure redress and penalties
– Obtain additional relief for affected consumers

The increasing incidents of fraud on Zelle have raised concerns among U.S. lawmakers and regulators, which includes Democratic Senator Elizabeth Warren. CFPB Director Rohit Chopra stated in a briefing, "What they built became a goldmine for criminals," criticizing the banks for creating a system that allows easy access for fraudsters while failing to provide adequate consumer protections or assistance for victims’ losses.

Zelle is a payments network managed by seven banks, including JPMorgan and Bank of America.

Responding to the lawsuit, Early Warning Services, the entity operating Zelle and co-owned by the banks, stated, "The CFPB’s attacks on Zelle are legally and factually flawed, and the timing of this lawsuit appears to be driven by political factors."

The CFPB report reveals that hundreds of thousands of consumers submitted fraud complaints yet largely received no support, with some being advised to contact the fraudsters directly to reclaim their lost funds.

JPMorgan, Bank of America, and Wells Fargo chose not to comment on the allegations.