The Consumer Financial Protection Bureau on Friday sued The operator of the Zelle payment network and the three U.S. banks that dominate transactions there claimed the firms didn’t properly investigate fraud complaints or provide refunds to victims.
The CFPB said customers of the three banks – JPMorgan Chase, Bank of America And Wells Fargo – have lost greater than $870 million since Zelle launched in 2017.
Zelle, a peer-to-peer payment network from the bank-owned fintech company Early Warning Services, enables easy payments to other consumers and businesses and has quickly turn into the biggest service of its kind within the country.
“The country’s largest banks felt threatened by competing payment apps and rushed to exclude Zelle,” CFPB Director Rohit Chopra said in an announcement. “By failing to provide adequate security, Zelle became a goldmine for fraudsters, while victims were often left to fend for themselves.”
Zelle said in an announcement Friday that it is ready to defend itself against this “meritless lawsuit.”
“Zelle is a leader in the fight against fraud and fraud and has industry-leading reimbursement policies that go beyond the law,” said Jane Khodas, a spokesperson for Zelle. “The CFPB’s misguided attacks will embolden criminals, cost consumers more fees, stifle small businesses, and make it harder for thousands of community banks and credit unions to compete.”
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