US Banks investigated over Zelle scams
List includes Wells Fargo, JPMorgan, BofA, others
By: Javeer Singh Shekhawat
and Hannah Lang
Reuters
..... The Consumer Financial Protection Bureau is investigating major U.S. Banks for their handling of customers funds on the peer-to-peer payment platform Zelle Network, the Wall Street Journal reported on Wednesday. [08/07/2024]
.....
The probe focuses on JPMorgan, Bank of America and Wells Fargo among other large banks, the reported said, citing people familiar with the matter.
..... JPMorgan last week [08/01/2024] had disclosed in a filing hat it was responding to the CFBP's inquires regarding Zelle and was considering whether to use the U.S. consumer watchdog over the agency's inquires.
..... Wells Fargo also has previously disclosed in public filings that government authorities have been probing the handling of customer disputes via Zelle.
..... The proliferation of fraud and scams on Zelle, which is owned by seven major banks including JPMorgan and Bank of America, has drawn attention from U.S. lawmakers, including Senator Elizabeth Warren, D-Massachusetts , and regulators conceder about consumer protection.
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Banks have argued that covering the cost of scams will encourage more fraud and potentially cost billions of dollars.
..... Spokespeople for JPMorgan, Wells Fargo, BofA and the CFPB declined to comment.
..... In a statement, Early Warning Services, the operator of Zelle, said it has "Proactively steps to go above the law by leading the industry in scam reimbursement efforts," and noted that 99.95% of transactions are completed without any reports of fraud or scams.
..... Senator Richard Blumenthal, D-Connecticut, who chairs a U.S. Senate subcommittee focused on investigations, called on the CFPB on Monday [08/05/2024] to investigate dispute reticulation practices at Early Warning Services, as well as JPMorgan, Wells Fargo and BofA.
..... That requires followed a report from his committee that found reimbursement for unauthorized transactions on Zelle fell "significantly: over a five-year period.
..... "Zelle and the banks that own it have failed to fully safeguard consumers from a growing threat of scams and fraud," Blumenthal said in a statement.