Zelle, the payment app you most likely use to send rent to your landlord, is at the center of a lawsuit announced Friday by the Consumer Financial Protection Bureau (CFPB).
The CFPB is suing fintech company Early Warning Services — the bank subsidiary that owns Zelle — as well as JPMorgan Chase, Bank of America, and Wells Fargo, alleging the bank’s customers lost more than $870 million in Zelle’s seven years. you were there.
A statement issued by the CFPB said Zelle and banks failed to “protect consumers from the widespread fraud in America’s most prevalent peer-to-peer payments system,” saying Zelle was rushed to market “to compete against emerging payment apps like Venmo and CashApp. , without implementing effective consumer protections.”
Mashable Light Speed
The Tweet may have been deleted
“The nation’s biggest banks felt threatened by competing payment apps, so they rushed to shut down Zelle,” CFPB Director Rohit Chopra said in a statement. “With their failure to put proper safeguards in place, Zelle has become a goldmine for fraudsters, while often leaving victims to fend for themselves.”
A Senate report this summer noted that banks returned only 38 percent of fraud claims to Zelle. Banks often don’t pay requests by noting that customers are directed to make authorized payments, which banks don’t have to reimburse, CNBC reported.
“Banks have failed to correct obvious flaws in their systems as hundreds of thousands of customers have filed fraud complaints,” Chopra told reporters on Friday, via CNBC. “Banks know that their customers’ money is stolen, but since they did not bear the cost of this loss, they drag their feet in fixing the problems.”
Banks and Zelle, on the other hand, pushed back against the suit, with Early Warning Services calling it “unmerited” and a spokesperson for JPMorgan Chase telling The Hill that “it was a last-ditch effort to pursue it. [the CFPB’s] political agenda”