Report: CFPB Drops Lawsuit Against Zelle Operator and Owner Banks
The Consumer Financial Protection Bureau (CFPB) reportedly dropped its lawsuit targeting the operator and three owner banks of Zelle.
The regulator said in a Tuesday (March 4) court filing that it dismissed the action against Early Warning Services, JPMorgan Chase, Bank of America and Wells Fargo “with prejudice,” CNBC reported Tuesday.
The CFPB did not immediately reply to PYMNTS’ request for comment.
Reached by PYMNTS, a Zelle spokesperson said in an emailed statement: “We welcome the CFPB’s decision to drop its lawsuit against the Zelle network. As we’ve said before, this lawsuit was without merit, and legally and factually flawed. We look forward to continuing to provide Zelle, a trusted service, to 151 million enrolled American consumer and small business accounts.”
The CFPB sued the four defendants on Dec. 20, alleging that they violated consumer protection laws by failing to guard against “widespread fraud” on the peer-to-peer payments (P2P) network.
The regulator alleged that the defendants failed to implement safeguards on the payment network; denied assistance to consumers who filed fraud complaints; and failed to properly investigate complaints or reimburse consumers for fraud and errors.
Zelle spokesperson Jane Khodos told PYMNTS in a Dec. 20 statement that the CFPB’s complaint was legally and factually flawed, that the timing of its lawsuit appeared to be driven by political factors and that Zelle was “fully prepared to defend this meritless lawsuit.”
“Zelle leads the fight against scams and fraud and has industry-leading reimbursement policies that go above and beyond the law,” Khodos said. “The CFPB’s misguided attacks will embolden criminals, cost consumers more in fees, stifle small businesses and make it harder for thousands of community banks and credit unions to compete.”
Zelle said in February that American consumers and small businesses transmitted more than $1 trillion using the platform during 2024, adding that this was the most money ever sent on a P2P service in a single year.
“Zelle is not just a popular way to send money, it’s a vital tool that’s transforming how money moves across America,” Zelle General Manager Denise Leonhard said in a Feb. 12 press release. “It is the go-to peer-to-peer payment method for millions of hardworking Americans, and this milestone is a testament to the trust they place in us every day.”
This is the latest of about a half dozen cases brought by former CFPB Director Rohit Chopra that have been dropped by Acting Director Russell Vought, according to Tuesday’s CNBC report.
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