JPMorgan Chase, Bank of America and Wells Fargo sued for failing to prevent fraud on Zelle

The Consumer Financial Protection Bureau said Friday it filed a complaint against three of the country’s largest banks and the operator of Zelle, the most widely available peer-to-peer payment system, “for allowing fraud to fester” on that network.

The Consumer Financial Protection Bureau said Friday it filed a complaint against three of the country’s largest banks and the operator of Zelle, the most widely available peer-to-peer payment system, “for allowing fraud to fester” on that network. CFPB alleges that, as a result, hundreds of thousands of customers of JPMorgan Chase, Bank of America and Wells Fargo have lost more than $870 million since Zelle launched seven years ago. Zelle disputes that estimate. The three banks named as defendants in the suit co-own Zelle, along with four other big US banks: Capital One, PNC Bank, Truist and US Bank. “The nation’s largest banks felt threatened by competing payment apps, so they rushed to put out Zelle,” said CFPB Director Rohit Chopra in a statement. “By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves.” CFPB notes that customers who filed fraud complaints “were largely denied assistance, with some being told to contact the fraudsters directly to recover their money.” What’s more, CFPB says, the entities being sued did not properly investigate complaints or give consumers “legally required reimbursement for fraud and errors.”