By Rebecca Ungarino
The Consumer Financial Protection Bureau said on Friday that it sued three of the four largest U.S. banks, alleging that they allowed widespread fraud on the popular payment network Zelle, which is operated by a financial-technology company co-owned by the lenders.
The suit follows what the CFPB said was years of complaints from "hundreds of thousands" of Zelle users, who said they lost their money to scams on the network, only to be told by the banks that they had little recourse, or in some cases that they should contact the people who took their money for help. Zelle called the suit "meritless."
The CFPB sued JPMorgan Chase, Bank of America, and Wells Fargo, in addition to Zelle operator Early Warning Services, an Arizona-based company that the banks co-own, for alleged consumer-protection failures. Customers of the three banks have lost more than $87o million since Zelle was formed seven years ago, according to the complaint, which was filed in federal court in Arizona.
Jane Khodos, a spokesperson for Zelle and vice president of communications for Early Warning Services, said in a statement on Friday that the CFPB's complaint is "legally and factually flawed."
"Zelle is relied upon by 143 million enrolled American consumers and small businesses, and we are fully prepared to defend this meritless lawsuit to ensure their service does not suffer," Khodos said. The CFPB's complaint "will embolden criminals, cost consumers more in fees, stifle small businesses and make it harder for thousands of community banks and credit unions to compete," her statement said.
Patricia Wexler, a spokesperson for JPMorgan, said in a statement that the CFPB "is now overreaching its authority by making banks accountable for criminals" for political gain. The CFPB, Wexler said, "is jeopardizing the value and free nature of Zelle, a trusted payments service beloved by our customers."
Bank of America had no immediate comment, while Wells Fargo declined to comment. In October, Bank of America, the second-largest U.S. bank by assets, disclosed in a regulatory filing that the CFPB had initiated an inquiry with the bank regarding its payments-processing through Zelle.
This is breaking news. Please check back for updates.
Write to Rebecca Ungarino at rebecca.ungarino@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 20, 2024 12:36 ET (17:36 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments