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CFPB Sues Three Major Banks Over Zelle Fraud

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CFPB Sues Three Major Banks Over Zelle Fraud

The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against three of the largest banks in the country for failing to safeguard the Zelle network from fraud and other defects.

Zelle is owned by Early Warning Services, LLC, which is co-owned by seven of the largest U.S. banks. Only three of those banks are named in the lawsuit, Bank of America, JPMorgan Chase and Wells Fargo. The CFPB says that their negligence has resulted in more than $870 million in consumer losses.

The CFPB says that the defendants violated the Consumer Financial Protection Act’s (CFPA) prohibition on unfair acts or practices by failing to take timely, appropriate, and effective measures to prevent, detect, limit, and address fraud on the Zelle Network.

It also alleges that the three banks violated the Electronic Fund Transfer Act and its implementing Regulation E for failing to conduct reasonable investigations of notices of errors submitted by consumers regarding Zelle transactions, by failing to properly treat incorrect and unauthorized Zelle transfers as errors under the law.

The CFPB is seeking among other things to bring the defendants into compliance with the law, consumer redress, and civil money penalties.

Zelle has responded by saying that the lawsuit filed by the CFPB will harm the very consumers the Bureau is required to protect, hurt America’s small businesses and make it harder for community and minority-owned banks and credit unions to compete.

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DDG
DDGhttp://dannydealguru.com
Based in NYC. Points/miles enthusiast for years and actively writing about it for the last 6+ years at Danny the Deal Guru. I'm always looking out for deals. Making a few bucks is always nice, but the traveling is by far the best part of this business.

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