New York (awp/afp) – The American banks JPMorgan Chase, Bank of America and Wells Fargo, as well as the operator of the Zelle application, are being sued by one of the American consumer protection agencies for having “allowed fraud to spread” on this payment service between individuals.
Early Warning Services – Zelle operator owned by a consortium of seven banks – and the three major banking establishments “rushed the device onto the market to compete with the growing number of payment applications, such as Venmo and CashApp, (but) without putting effective protections for consumers,” the Financial Consumer Protection Bureau (CFPB) said in a statement on Friday.
According to the agency, which appealed to a federal court in Arizona, this represents $870 million in cumulative losses for customers of these three banks since the creation of Zelle in 2017.
Zelle estimated, in a separate press release, that these “unfounded” lawsuits would in particular “harm the consumers that the Bureau is precisely responsible for protecting” and “affect small businesses”.
These attacks are “legally and factually erroneous,” commented Jane Khodos, a spokesperson for Zelle, saying that the timing of these lawsuits “appears to be linked to political factors unrelated to Zelle.”
Assuring that it is a “spearhead” in the fight against scams and fraud, the company responds that it goes “beyond” the legal requirements in terms of reimbursing victims.
This application is, according to the Bureau, the largest almost instantaneous payment service between individuals in the United States, offered by more than 2,200 banks and credit companies.
It works from cell phone numbers and email addresses.
143 million registered ___
According to Zelle, some 143 million Americans and small businesses are signed up. The latter alone carried out, in the first half of 2024, nearly 244 million transactions, representing nearly 130 billion dollars.
“Hundreds of thousands of consumers have made reports of fraud and have been, for the most part, refused any assistance,” deplores the CFPB, emphasizing that in response to their efforts, certain customers were simply invited to turn to the perpetrator of the fraud to get their money back.
The organization also alleges that JPMorgan, Wells Fargo and Bank of America “failed to properly investigate or provide consumers with legally required refunds in the event of fraud or error.”
These banks “left the door open for scammers”, “allowed repeat offenders to jump from one bank to another”, “ignored alerts that could have prevented fraud” and “abandoned consumers after the fraud occurred “, listed the CFPB.
The president of the American Banking Association (ABA), Rob Nichols, said Americans should be “extremely skeptical” of these lawsuits “launched in the final days of this administration.”
“Instead of focusing on the real bad actors – the criminals and the scammers… – this CFPB has devoted most of its time, energy and resources to attacking the banks, often overstepping its bounds. statutory authority and without consideration for harm to consumers,” he continued in a statement.
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