Action Against Owners of Zelle Will Improve Consumer Safety, Reduce P2P Fraud
WASHINGTON – Today, the Consumer Financial Protection Bureau (CFPB) sued the owner of the bank payment app Zelle and three of the nation’s largest banks for failing to protect consumers from fraud in the peer-to-peer payment network. The CFPB alleges that hundreds of thousands of customers lost more than $870 million using Zelle, which is used by hundreds of banks and operated by Early Warning Services (EWS). EWS is owned by seven large banks, including Bank of America, JPMorgan Chase, and Wells Fargo. NCLC advocates praised the enforcement action as an important step in holding payment systems accountable for enabling fraudulent and unauthorized payments that have stolen $870 million from those three banks alone.
“Payment fraud impacts all Americans across many communities, young and old,” said Carla Sanchez-Adams, senior attorney at the National Consumer Law Center. “The CFPB is standing up for people who weren’t able to get the big banks to take their claims of fraud seriously and return their hard-earned money. The CFPB helps ordinary people who’ve been hurt by big banks.”
Person-to-person (P2P) payment systems, if properly designed, can provide broad benefits to consumers. But those benefits will only be realized if the systems are safe to use.
Zelle is one P2P payment system that has become popular among criminals perpetrating payment fraud. The lack of response to consumer complaints about unauthorized payments by Zelle has also drawn the attention of the U.S. Senate. Earlier this year, Sanchez-Adams testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on scams and fraud in the banking system and their harm to consumers.
P2P fraud has a particularly harsh impact on low-income families and communities of color. These communities, already struggling and often pushed out of the traditional banking system, can least afford to lose money to fraud and hacks.
Related Resources
- Report by the U.S. Senate Permanent Subcommittee on Investigations, Jul. 23, 2024
- Letter to Zelle by Senators Sherrod Brown, Elizabeth Warren, and Jake Reed, Feb. 15, 2024
- Testimony of Carla Sanchez-Adams on “Examining Scams and Fraud in the Banking System and Their Impact on Consumers,” Feb. 1, 2024
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