The Consumer Financial Protection Bureau , sued , JPMorgan Chase &, Co.,  , Bank of America Corp.  , and , Wells Fargo &, Co.  , along with the parent firm of Zelle alleging the corporations rushed a peer-to-peer payment system to business without sufficient consumer protections.
” By their failing to put in place appropriate protection, Zelle became a silver mine for swindlers, while often leaving patients to fight for themselves”, said CFPB Director , Rohit Chopra , in a statement Friday.
A Zelle spokesperson said the CFPB’s lawsuit is legally and factually flawed while a representative for , JPMorgan , called them” a last-ditch effort in pursuit of their political agenda” . , Bank of America , said more than 99.95 % of transactions go through without issue and it strongly disagreed with the agency’s move.
A official for , Wells Fargo , declined to comment.
JPMorgan,  , Wells Fargo , and , Bank of America , are the largest institutions participating in the Zelle network, according to the complaint, accounting for 73 % of its activity last year.
The , CFPB , claimed that fraud issues weren’t addressed, with consumers generally denied comfort when they went to their banks, according to the national complaint filed in , Arizona.
Both , JPMorgan , and , Wells Fargo , recently disclosed that the consumer bureau was investigating their management of Zelle deals, which the lenders rely on to encourage customers to engage with them more digitally.  , JPMorgan , even said earlier this year it was evaluating its reaction to the federal investigation, including possible litigation.
Extremely common
Due to the rise in popularity of peer-to-peer payment platforms, customer repayment schemes using Zelle have come under scrutiny from US politicians. The business reported in October that transactions totaling almost$ 500 billion increased 27 % in the first half of 2024.
The Bank Policy Institute , said Zelle is safer than , Block Inc. owned , Cash App , and , PayPal Holdings Inc. owned Venmo, two of the most popular pay programs in the US. The organization criticized the company’s actions and claimed that its research revealed that problems on PayPal are three times higher than those on Zelle, and that those on Cash App are six times higher.
The dynamic force of peer-to-peer payment methods, the , CFPB , alleges in the match, pushed the banks to rapidly deliver Zelle online to leverage their existing customer base. Once problems arose, the agency claims the banks didn’t address them for years.
The mounting complaints added up to fraud losses of around$ 870 million spread among the three banks, according to the , CFPB.
Focused action
Early Warning Services, the company that operates Zelle, is owned by seven of the largest US banks: the three named in the lawsuit as well as , Capital One Financial Corp.,  , PNC Financial Services Group Inc.,  , Truist Financial Corp.  , and , US Bancorp.
The , CFPB , didn’t target the other owner banks in its lawsuit, but agency officials told reporters that all seven of the owner banks play a role in establishing Zelle policies and procedures.
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