The Consumer Financial Protection Bureau (CFPB) has officially closed its lawsuit concerning Zelle, a major peer-to-peer payment network. On Tuesday, the agency announced the dismissal with prejudice of its case against Early Warning Services, the operator of Zelle, along with three prominent U.S. banks: JPMorgan Chase, Bank of America, and Wells Fargo. Initially filed in December, the lawsuit claimed that these financial institutions inadequately addressed fraud complaints and mishandled reimbursements for customers.
Key Developments
The CFPB’s dismissal of the action indicates a definitive end to the case, meaning it cannot be refiled in the future. Regulators stated, “the action against Defendants Early Warning Services, LLC, Bank of America, N.A., JPMorgan Chase Bank, N.A., and Wells Fargo Bank, N.A., is hereby dismissed with prejudice.”
Background on the Lawsuit
The case stemmed from ongoing complaints regarding consumer fraud linked to Zelle, which has amassed over $1 trillion in transaction volume since its inception in 2017. Over the years, the CFPB revealed that customers of the involved banks have reported losses exceeding $870 million due to fraudulent transactions involving Zelle.
Acting CFPB Director Russell Vought’s tenure has seen the agency dismiss several lawsuits initiated by his predecessor, Rohit Chopra. This shift has drawn scrutiny, including legal challenges related to alleged purges of workforce and data under Vought’s leadership.
Industry Reactions
Following the dismissal, a representative from Zelle welcomed the regulator’s decision, labeling the lawsuit as “legally and factually flawed.” Meanwhile, a spokesperson for JPMorgan emphasized that banks hold a significant role in preventing scams and educating consumers. Citing the growing concern over fraud, Lindsey Johnson, president of the Consumer Bankers Association, stressed the importance of collaboration between public and private sectors in combating broader security challenges.
As the financial landscape grapples with rising fraud incidents, the discontinuation of this lawsuit closes a critical chapter in the ongoing debates surrounding consumer protection and liability in the digital payment space.
