“Zelle leads the fight against scams and fraud and has reimbursement policies that exceed legal requirements,” Khodos said. She warned that the lawsuit could embolden criminals, raise consumer costs, and disadvantage small businesses and community banks.
Investigation Highlights Gaps in Consumer Protections
The CFPB launched its investigation into Zelle in 2021, finding that the banks introduced the payment platform hastily to compete with digital services like Venmo and Cash App. Chopra argued that this rush came at the expense of customer safety, as the banks failed to implement fundamental fraud protections.
Chopra alleged that big banks leveraged their control over consumer deposit accounts to pressure smaller financial institutions into joining Zelle, despite the platform’s flaws. Complaints from hundreds of thousands of customers about fraudulent transactions were met with inadequate responses from the banks.
“The banks knew their customers were having their money stolen, but since they weren’t bearing the full cost of these losses, they dragged their feet on fixing the problems,” Chopra said.
Legal and Financial Repercussions
The CFPB is seeking extensive remedies in its lawsuit, including damages, restitution, disgorgement of profits, refunds, civil monetary penalties, and legal costs. Counsel for the banks was not immediately available for comment.
