The Consumer Financial Protection Bureau told a federal court on Tuesday it was dropping a lawsuit filed in December against three of the nation’s largest banks over their handling of the payment service Zelle, court papers show.
The agency, which was virtually shuttered by President Trump last month, had accused JPMorgan Chase, Bank of America and Wells Fargo of failing to protect consumers from fraud costing hundreds of millions of dollars.
Representatives for the CFPB, JPMorgan, Wells Fargo, and Early Warning Services, the joint venture of seven different banks which operates the Zelle system, did not immediately respond to requests for comment about the agency’s action in an Arizona federal court. Bank of America declined to comment.
In an unprecedented move, the CFPB has now dropped seven of the enforcement cases brought under former President Joe Biden, including one against Capital One. Many of the other pending cases have been paused in court.
In the final days of the Biden administration, the CFPB accused EWS and the three banks of rushing the Zelle service to market to compete with apps like PayPal’s Venmo and Block’s Cash App without implementing proper user safeguards.
Hundreds of thousands of consumers subsequently lodged complaints about fraud but were by and large denied assistance, sometimes being told to ask the alleged fraudsters to return their funds, according to the CFPB.
Though Trump has said the CFPB should be eliminated, agency officials and government lawyers have maintained in court that the administration intends to operate a “streamlined” CFPB in keeping with its legal obligations.
An employee union and consumer advocates are suing, however, to stop what they say are administration plans that would effectively gut the agency and leave it unable to fulfill its obligations under federal law.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
