Government Takes Legal Action Against Payment App and Major Banks Over Alleged Failure to Prevent Fraud

Feds Sue Zelle, Alleging Nation’s Biggest Banks Failed to Stop Fraud

The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Zelle, accusing the payment app and three major US banks of failing to prevent widespread fraud on their platforms. The allegations suggest that Bank of America, JPMorgan Chase, and Wells Fargo ignored customer complaints related to Zelle transactions, resulting in hundreds of millions of dollars lost to scammers.

According to the CFPB, these leading financial institutions failed to adequately protect their customers from fraudulent activities, allowing them to lose a staggering $870 million over seven years. The regulatory agency claims that the banks rushed to launch Zelle without implementing proper safeguards, creating an environment in which fraudsters could thrive.

The suit alleges that Bank of America, JPMorgan Chase, and Wells Fargo received hundreds of thousands of complaints regarding fraudulent transactions on Zelle, but took little action to address these concerns. In some cases, customers were even advised by the banks to contact the scammers themselves to recover their lost funds.

Source: http://www.cbsnews.com