Banks cleared in Zelle payment fraud investigation
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The Consumer Financial Protection Bureau (CFPB) has withdrawn its legal action against three major American banks regarding their management of the Zelle payment platform.
Through an official court document, the CFPB formally announced its decision to dismiss the case against EarlyWarning Services, LLC, Bank of America, JPMorgan Chase, and Wells Fargo Bank, with prejudice.
The lawsuit, initiated during the final weeks of Biden’s administration last December, targeted Bank of America, JP Morgan Chase, and Wells Fargo. The CFPB had accused these financial institutions of hastily implementing their Zelle payment system to maintain competitiveness with rival services like Venmo and CashApp.
Today CFPB did the right thing and dropped its case against Zelle.
We know there are mass scams and fraud online.
But placing liability on payment rails, rather than punishing the bad actors, only harms consumers who rely on these services.
A victory for consumer choice! https://t.co/GDDSihqmug pic.twitter.com/CU6vcVcQT7
— Consumer Choice Center (@ConsumerChoiceC) March 4, 2025
Under Biden’s administration, the CFPB expressed concerns that these banks had inadequately safeguarded consumers from widespread fraudulent activities on what has become America’s most accessible peer-to-peer payment network.
Russell Vought, currently serving as both Acting CFPB Director and Director of the Office of Management and Budget (OMB), has terminated numerous legal proceedings that were initiated under former CFPB director Rohit Chopra’s leadership.
CNBC reported:
> The agency is now embroiled in a legal battle after a union representing CFPB employees sued to halt mass firings and the purging of data that would’ve happened under Vought and Elon Musk’s Department of Government Efficiency.
To anyone that uses the @Zelle standalone app instead of through a major bank, the app itself is about to be shut down. Considering that they did $20 billion in transactions last year, that's A LOT of people that are going to be left out.https://t.co/WAHJwR6U1G
— Digital Blerd 👨🏿💻🦸🏿♂️ (@DigitalBlerd) March 1, 2025
According to CFPB data, customers of these three banks have experienced losses exceeding $870 million since Zelle’s inception in 2017. The platform was developed to compete with existing peer-to-peer payment services such as PayPal. Zelle achieved a significant milestone last year, processing over $1 trillion in transactions, marking the highest volume ever recorded by a peer-to-peer platform.
Axios has reported that approximately 200 contracts essential to CFPB operations were terminated under Trump’s administration.
The dismissal of these cases “with prejudice” effectively means the CFPB cannot pursue these specific claims in court again.
