(Finance) – The Consumer Financial Protection Bureau (CFPB) of the United States has sued the operator of Zelle and three of the nation’s largest banks for failing to protect consumers from widespread fraud on America’s most widely available peer-to-peer payment network.
Early Warning Services, which operates Zelle, along with three of its proprietary banks (Bank of America, JPMorgan Chase And Wells Fargo), launched his network for compete with payment apps like Venmo and CashAppwithout however implementing effective safeguard measures for consumers.
The customers of the three banks named in today’s case have lost more than $870 million in the network’s seven years of existence Due to these failures, the CFPB said, hundreds of thousands of consumers have filed fraud reports and have been largely denied assistance, with some asked to contact scammers directly to recover their money. their money. Bank of America, JPMorgan Chase and Wells Fargo also allegedly failed to properly investigate complaints or provide consumers with legally required refunds for fraud and errors.
“The nation’s largest banks felt threatened by competing payment apps, then they rushed to bring Zelle to market – said the director of the CFPB, Rohit Chopra – By failing to implement the necessary safeguards, Zelle has become a gold mine for scammers, often leaving victims to fend for themselves.”
Zelle allows near-instant electronic money transfers via linked email addresses or US-based mobile phone numbers, known as “token“. Users can create multiple tokens across different banks and quickly reassign them between institutions, a feature that has left consumers vulnerable to fraud.
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