JPMorgan Chase, Bank of America, and Wells Fargo are facing a federal investigation over their handling of scams and fraud on the popular instant payment platform Zelle. The Consumer Financial Protection Bureau (CFPB) is looking into how these banks deal with disputed transactions on the network.
The investigation comes after complaints that the banks aren’t doing enough to prevent fraudulent transfers, especially scams. These scams often involve someone being tricked into authorizing a fake transaction.
Investigators are also looking into whether the banks are doing enough to vet their customers and shut down scam accounts. A Senate subcommittee recently found that the three banks reimbursed victims of Zelle scams only 38% of the time in 2023, down from 62% in 2019. The subcommittee also says the banks have refused to reimburse a whopping $880 million in disputed Zelle transactions between 2021 and 2023.
Zelle has recently started requiring its banks to reimburse some scams in certain situations, like when someone impersonates a lender or the government. However, the CEO of Zelle’s parent company, Early Warning Services, argues that focusing on reimbursements isn’t the solution. He believes the focus should be on catching the criminals behind the scams.
JPMorgan Chase has publicly commented on the CFPB investigation, claiming the agency is going “above and beyond what the law requires.” The bank has even threatened to challenge the regulator’s actions in court.
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