Zelle Scams Prompting Government Action
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In a world where hundreds of payment apps exist, you’ve likely had personal experience with one: Zelle. This is because you don’t have to have the Zelle app downloaded on your phone to send or receive money through it. In fact, Zelle is “available in over 2,200 banking apps in the U.S.”, making it one of the most widespread payment apps in the nation. However, with such an influence over personal and business money transfers, it has prompted a wave of fraud and scammers. In a bid to protect consumers from these issues stemming from Zelle, the federal government has sued its parent banks.
On Friday, the U.S. Consumer Financial Protection Bureau filed a lawsuit against JPMorgan Chase, Bank of America, and Wells Fargo. The suit alleges that these banks have allowed Zelle to devolve into “a goldmine for criminals” with little to no help for victims who have had more than $870 million lost through Zelle scams. This has happened because while “federal rules require banks to reimburse customers for unauthorized payments”, many who lose money through Zelle have been tricked into authorizing the payments themselves. In that instance, banks are not required to reimburse the scam victim.
The lawsuit seeks to hold the three banks responsible for customer losses and to enact further protections to keep fraudsters from proliferating on the payment platform. However, JPMorgan Chase, Bank of America, and Wells Fargo are fighting back. In statements from JPMorgan and BofA, the banks criticize the “CFPB's effort to impose huge new costs” and measures that “would not make banks safer”. Further challenges may await the CFPB next month as a new federal administration takes power.
If you’ve lost money through a Zelle scam and were not helped by your bank, this lawsuit could be big for you. But the litigation will likely take a long time and be subject to challenges. To stay updated on the latest for this case, follow XQ CPA’s blog and social media. We are dedicated to providing the latest business updates that will affect you.
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