Consumer protection agency sues Zelle operator, 3 large banks, for neglecting security safeguards

December 20, 2024 Brooklyn Eagle Staff

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NATIONWIDE — JUST HOW SAFE IS THAT ZELLE PAYMENT? The federal Consumer Financial Protection Bureau on Friday, Dec. 20 filed a lawsuit against the operator of the payment network Zelle and three of the largest U.S. banks for allegedly failing to protect consumers from widespread fraud, according to the CFPB. Customers reportedly lost more than $870 million in total over the seven years Zelle has operated.

The CFPB sued operator Early Warning Services and owner banks Bank of America, JPMorgan Chase and Wells Fargo, over accusations of having rushed Zelle to market without first implementing effective consumer safeguards, in order to beat out competitors like Venmo and CashApp. The lawsuit alleges that the three banks denied assistance to thousands of consumers who filed fraud complaints, even telling some customers to contact fraudsters directly for refunds; and that they allegedly failed to investigate complaints properly or to comply with legally mandated requirements for reimbursement for fraud and errors.

The lawsuit seeks an end to the alleged unlawful conduct, redress for consumers and a civil money penalty for the CFPB’s victims fund.

Rohit Chopra, director of the CFPB, said in prepared press call remarks on Friday, “Americans deserve payment systems that are fast and secure. Some of America’s largest banks promised Zelle would be both, but it wasn’t. The CFPB’s lawsuit seeks to hold these banks accountable and ensure that American families can trust their money is protected when they send payments.”