StocksUS Markets

US Consumer Watchdog Investigates Major Banks Over Zelle Scam, Reports WSJ

The Consumer Financial Protection Bureau (CFPB) is currently investigating several major U.S. banks regarding their management of customer funds on the peer-to-peer payment service Zelle Network, according to a report from the Wall Street Journal.

The inquiry specifically includes prominent banks such as JPMorgan Chase, Bank of America, and Wells Fargo, as well as other large financial institutions, as revealed by sources familiar with the situation.

Recently, JPMorgan disclosed in a filing that it is responding to the CFPB’s inquiries about Zelle and is contemplating legal action against the agency concerning these inquiries. Similarly, Wells Fargo has indicated in earlier public filings that it is under scrutiny over its handling of customer disputes related to Zelle.

The surge in fraud and scams associated with Zelle has drawn criticism from U.S. lawmakers, including Senator Elizabeth Warren, and raised alarms among regulators focused on consumer protection. The banks contend that assuming the financial burden of scams could inadvertently promote more fraudulent activity, potentially resulting in significant losses.

Representatives from JPMorgan, Wells Fargo, Bank of America, and the CFPB opted not to comment on the ongoing investigation. Meanwhile, Early Warning Services, which operates Zelle, stated it has implemented measures to lead the industry in scam reimbursement initiatives and emphasized that 99.95% of transactions are conducted without reports of fraud or scams.

Senator Richard Blumenthal, who chairs a Senate subcommittee on investigations, has urged the CFPB to also examine the dispute resolution practices of Early Warning Services, along with those of JPMorgan, Wells Fargo, and Bank of America. This call for action follows a committee report indicating that reimbursements for unauthorized Zelle transactions have decreased “significantly” over the past five years.

Blumenthal stated, “Zelle and the banks that own it have failed to fully safeguard consumers from a growing threat of scams and fraud.” He expressed anticipation for the CFPB to review the committee’s findings and conduct a thorough investigation.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker