The Consumer Financial Protection Bureau (CFPB) is dropping its lawsuit against the company that runs the Zelle payment platform and three U.S. banks, according to the Associated Press.
In December, the federal regulator sued JPMorgan Chase, Wells Fargo, and Bank of America, claiming the banks failed to protect hundreds of thousands of consumers from rampant fraud on Zelle, in violation of consumer financial laws.
In the federal civil complaint, the CFPB asserted that the banks rushed to get the peer-to-peer payments platform to market without effective safeguards against fraud and then, after consumers complained about being defrauded on the service, largely denied them relief.
Early Warning Services (EWS), a fintech company based in Scottsdale, Arizona, that operates Zelle, was named as a defendant in the lawsuit. EWS is owned by seven U.S. banks, including JPMorgan, Wells Fargo, and Bank of America. Those three banks are the largest financial institutions on the Zelle network, accounting for 73% of activity on the platform in 2023.
However, a filing in the U.S. District Court for the District of Arizona on Tuesday indicated that the CFPB was dismissing its lawsuit against EWS, Bank of America, JPMorgan Chase, and Wells Fargo with prejudice.
The dismissal comes less than a week after the CFPB dropped several enforcement actions against other companies. Those suits were all filed under the agency’s previous director, Rohit Chopra, who President Donald Trump fired just weeks ago. The CFPB has since plunged into turmoil, with the White House later ordering it to halt nearly all its work. The administration also closed the agency’s headquarters and moved to fire scores of its workers.
