Banks are facing renewed pressure to protect their customers from scams on Zelle, the payment network owned by JPMorgan, Wells Fargo, Bank of America, Capital One, and other big banks. In letters to the banks, Sen. Elizabeth Warren (D-MA), Sen. Richard Blumenthal (D-CT), and Rep. Maxine Waters (D-CA) asked them how often their customers report Zelle scams that originate from social media.
Last year, the Consumer Financial Protection Bureau (CFPB) sued Wells Fargo, Bank of America, and JPMorgan Chase over claims they “rushed” Zelle’s launch in 2017 and failed to protect customers from “widespread fraud,” which resulted in more than $870 million lost to scams. In an attempt to protect its customers, Chase began blocking Zelle payments over social media, where scams often show up, last February. The CFPB dropped its Zelle lawsuit in March after President Donald Trump’s administration began dismantling the agency.
Without the support of the CFPB, the three lawmakers are now taking matters into their own hands. They asked the banks that own Zelle, which they claim is “associated with significant scams and fraud,” if they have noticed any broader trends of fraud on the payment platform, such as whether they come from social media or another source. The lawmakers are also pressing the banks for their policies on reimbursing customers who fall victim to scams on Zelle and other peer-to-peer payment networks. The banks have until July 14th to respond.
“Banks, including JPMorgan Chase, have historically failed to protect consumers from Zelle fraud and scams,” the letters stated. “According to the CFPB’s lawsuit, for example, since Zelle was created, the banks that run the payment service have not meaningfully improved their ability to detect and prevent fraud or increased their reimbursements to customers defrauded on Zelle to match the increase in fraud rates.”
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
