Statement: CFPB sues Zelle’s operator, 3 of the banks that own payment app

Lawsuit alleges peer-to-peer network failed to properly safeguard against fraud

WASHINGTON — The Consumer Financial Protection Bureau (CFPB) announced on Friday a lawsuit against Early Warning Services, the operator of peer-to-peer payment network Zelle, and three of its owner banks—Bank of America, JPMorgan Chase, and Wells Fargo. The CFPB alleges that, among several issues, these companies violated federal law by only having  “limited identity verification methods,” not sharing “information about known fraudulent transactions with other banks on the network,” and failing “to properly investigate Zelle customer complaints and take appropriate action.”

Since U.S. PIRG first published a report in 2021 about payment app complaints that the public lodged with the CFPB, fraud has become the number one complaint about payment apps. Fraud is the number two complaint total — behind problems with managing, opening, or closing accounts — since the CFPB started taking payment app complaints in 2017.

In response to the lawsuit, PIRG’s Consumer Campaign Director Mike Litt released the following statement:

“As a Senate report this year found, consumers have had problems with fraud on Zelle for years. Hopefully, the CFPB’s lawsuit can change that. These troubling alleged practices need to be addressed by all parties as quickly as possible. It’s crucial that in our increasingly cashless age, we have digital financial systems that the public can trust and use without fear of losing their money.”