Numerous Security Concerns About Zelle: Lawsuit Filed Against Leading U.S. Banks

The regulatory authority Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against three major banks and Early Warning Services, the consortium behind the popular payment app Zelle. The allegation is that the consortium has taken insufficient measures against fraud on the Zelle network, which enables customers to transfer money instantly between banks and individuals. The complaint specifically names JPMorgan Chase, Bank of America, Wells Fargo, and Early Warning Services. The latter is also co-owned by Capital One, PNC Bank, Truist, and U.S. Bank, which were not named as defendants. CFPB Director Rohit Chopra stated that customers of these banks have suffered losses of over 870 million US dollars in the seven years since Zelle's introduction. The CFPB's lawsuit accuses the banks and the consortium of failing to implement effective consumer safety measures during the rushed launch to compete with payment apps like Venmo and CashApp, leading to extensive consumer losses. Furthermore, it is alleged that Zelle does not sufficiently verify identities and that banks have failed to promptly restrict and pursue criminals within the network. A spokeswoman for Zelle, Jane Khodos, defended the company against the allegations by pointing to potential political motives behind the lawsuit, stating that the CFPB's attacks would only embolden criminals and result in higher fees for consumers. A spokeswoman for JPMorgan Chase, Patricia Wexler, clarified in a statement that the CFPB's attacks endanger the value and free model of Zelle, a payment service appreciated by many customers.