CFPB Drops Lawsuit over Use of Payment Service Zelle

The Consumer Financial Protect Bureau (CFPB) on Tuesday dropped its lawsuit against three of the nation’s largest banks due to their handling of the payment service Zelle.

A court filing from the CFPB stated, “Pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i), the Plaintiff, Consumer Financial Protection Bureau, dismisses this action against Defendants Early Warning Services, LLC, Bank of America, N.A., JPMorgan Chase Bank, N.A., and Wells Fargo Bank, N.A., with prejudice.”

The financial regulatory agency, during the late hours of the Biden administration in December, filed suit against Bank of America, JP Morgan Chase, and Wells Fargo for allegedly rushing through its Zelle payment app to better compete against Venmo and CashApp. 

The Biden-era CFPB believed that these banks failed to “protect consumers from widespread fraud on America’s most widely available peer-to-peer payment network.”

Acting CFPB Director Russell Vought, who is also the director of the Office of Management and Budget (OMB), has dropped more than a half dozen cases brought on by the Biden-era CFPB director, Rohit Chopra.

CNBC reported:

The agency is now embroiled in a legal battle after a union representing CFPB employees sued to halt mass firings and the purging of data that would’ve happened under Vought and Elon Musk’s Department of Government Efficiency.

The CFPB said customers of the three banks have lost more than $870 million since the launch of Zelle in 2017. The service was launched to provide bank customers an alternative to peer-to-peer platforms including PayPal. Last year Zelle crossed $1 trillion in total volumes, which it said was the most ever for a peer-to-peer platform.

Axios noted that roughly 200 contracts that were reportedly vital to the operations of the CFPB were canceled by the Trump administration.

Because the CFPB cases were dismissed with prejudice, the CFPB agreed to never bring these claims to court again.