CFPB Director Rohit Chopra before the Senate Committee on Banking, Housing, and Urban Affairs entitled “Semi-Annual Report to Congress of the Consumer Financial Protection Bureau” on November 30, 2023 in the Dirksen Building ” testified at the hearing.
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this Consumer Financial Protection Bureau on friday sued The operator of the Zelle payment network and three U.S. banks that dominate transactions on the network have accused the companies of failing to properly investigate fraud complaints or provide compensation to victims.
The CFPB said customers of the three banks— JPMorgan Chase, Bank of America and Wells Fargo –Zelle has lost more than $870 million since launching in 2017.
Zelle is a peer-to-peer payments network run by Early Warning Services, a fintech company owned by the bank, that allows instant payments to other consumers and businesses and has quickly emerged as the largest such service in the country.
“The largest banks in the United States felt threatened by competing payment apps, so they rushed to launch Zelle,” CFPB Director Rohit Chopra said in a statement. “By failing to put in place appropriate safeguards, Zelle became a golden opportunity for fraudsters. Mines, while often leaving victims to fend for themselves.”
The lawsuit is the latest move by the CFPB in the waning days of the Biden administration. Many of its actions, including measures to limit late fees and overdraft fees on credit cards, have been met with fierce opposition from banks and their trade groups. Companies have successfully fought back against regulators by choosing legal venues that are friendly to lawsuits challenging federal regulations.
In fact, JPMorgan Chase said in August that it was considering filing a lawsuit against the CFPB if it sought to punish the bank for its role in the Zelle network.
Zelle said in a statement on Friday that it was prepared to defend against the “baseless lawsuit.”
“Zelle leads the fight against scams and fraud and has industry-leading reimbursement policies that go beyond the law,” said Zelle spokesperson Jane Khodas. “The CFPB’s misleading attacks will embolden criminals and leave consumers with more burdens.” fees, killing small businesses and making it harder for thousands of community banks and credit unions to compete.”
This story is developing. Please check back for updates.
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