- CFPB Director Chopra says Zelle is ‘gold mine for fraudsters’
- Zelle says CFPB’s actions are legally, factually flawed
The Consumer Financial Protection Bureau sued
“By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves,” said CFPB Director
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 representative 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 complaints weren’t addressed, with consumers largely denied relief when they went to their banks, according to the federal lawsuit filed in Arizona.
Both JPMorgan and Wells Fargo
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Consumer payment scams via Zelle have
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The Bank Policy Institute said Zelle is safer than
The competitive pressure of peer-to-peer payment systems, the CFPB alleges in the suit, pushed the banks to quickly bring 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.
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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
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.
(Updates with additional background and context throughout, adds comment from banks)
--With assistance from
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To contact the editors responsible for this story:
Rick Green, Megan Howard
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