The Consumer Financial Protection Bureau (CFPB) has withdrawn a significant lawsuit against three major U.S. banks concerning alleged inadequate safeguards on the Zelle money transfer network. Filed during the final days of the Biden administration, the lawsuit accused Bank of America, JPMorgan Chase, and Wells Fargo of enabling fraudulent transactions exceeding $800 million.
Critics often label such legal actions as “rule-making by enforcement.” Federal law mandates banks to refund unauthorized transactions, but Zelle scams typically involve victims transferring funds themselves under deception. Banks argue they aren’t liable for reimbursing self-initiated transactions.
Former CFPB director Rohit Chopra criticized Zelle as a haven for fraudsters, complicating customer reimbursement. The case could have redefined banks’ responsibilities in protecting customers from payment app fraud.
— news from The New York Times