The US Consumer Financial Protection Bureau is suing Zelle and its four banks

On Friday, the Consumer Financial Protection Bureau (CFPB) the defendant four financial companies involved in Zelle. The CFPB case (through Price CNBC) accuses the operator Zelle (Early Warning Services) and three of the banks involved in the project – JPMorgan Chase, Bank Of America and Wells Fargo – for failing to protect consumers from common fraud in the peer-to-peer payment system.

The CFPB says customers of the three banks lost $870 million during the Zelle period seven years as paid work. The lawsuit alleges that thousands of customers who filed fraud complaints were denied assistance, while others were told to “contact the scammers to get their money back.” (Pro tip: Don’t do that.)

“The nation’s biggest banks were threatened by competing payment apps, so they rushed to get rid of Zelle,” CFPB Director Rohit Chopra said. he wrote in a sentence. “By failing to implement proper security, Zelle has become a gold mine for fraudsters, often leaving victims to fend for themselves.”

The CFPB says that one of the problems with the system is that its “identifiers” (US-connected phone numbers or email addresses) can be used and redistributed to different banks. The agency says fraudsters can use this by linking the victim’s phone number or email address to the perpetrator’s account, causing the money to be transferred to the scammer’s account instead.

The lawsuit accuses Zelle and the banks of allowing repeat offenders to move between financial institutions with impunity. “Banks have not shared information about fraudulent activity identified by other banks on the Internet,” the CFPB wrote. “As a result, bad actors can commit fraud repeatedly across multiple organizations before they are caught, if at all.”

The CFPB also states that the accused banks failed to heed red flags to prevent further fraud, report transactions regularly or in a timely manner, properly investigate customer complaints or take appropriate action.

On Friday, Zelle filed a federal lawsuit as a political aide to criminals and forced them to pay money. “The CFPB’s attack on Zelle is both legally and factually wrong, and the timing of this case appears to be driven by a political party that has nothing to do with Zelle,” said Jane Khodos, a spokeswoman for Zelle. words. “Zelle is leading the fight against fraud and fraud and has refund policies that go beyond the law. The CFPB’s misguided crackdown will empower criminals, cost consumers more money, discourage small businesses and cause many local banks and credit unions to fail.” compete with them.

In September, JPMorgan Chase he wrote in quarterly bookings (via Price CNBC) to consider counter-prosecutions if the CFPB takes action against the bank for its role with Zelle.

last month, The Washington Post report that President-elect Donald Trump and Congressional Republicans are planning to reduce the funding and powers of the CFPB, in line with the policies of the major financial institutions. Elon Musk and Vivek Ramaswamy, his “government” advisers, have said they want to dissolve the agency, which was created in 2011 in response to the 2007-08 financial crisis and recession.

Killing the agency would require votes in Congress that would not pass, due to a very small number of Republicans. But he could do what Trump did in his first term: appoint a new director to slow down or stop the regulatory process, effectively. to kneel down organization as long as they are in charge.