The Consumer Financial Protection Bureau (CFPB) has withdrawn its lawsuit against JPMorgan Chase, Bank of America, and Wells Fargo, which had accused the banks of permitting fraud to thrive on the P2P payments platform Zelle.
The CFPB initially filed the lawsuit against the three banks and Early Warning Services, the bank-owned operator of Zelle, late last year. Recently, in a filing with the US District Court for the District of Arizona, the CFPB dismissed the case with prejudice, meaning it cannot be refiled.
Since its launch in 2017, Zelle has gained immense popularity, boasting over 150 million registered users who collectively sent more than $1 trillion through the platform last year.
However, the CFPB previously claimed in its lawsuit that the banks and Early Warning Services failed to adequately protect users from “widespread fraud.” It alleged that they hastily launched Zelle to compete with platforms like Venmo and CashApp without implementing sufficient user safeguards. As a result, customers of the three banks reportedly lost over $870 million in the seven years since Zelle’s inception.
In recent weeks, the CFPB has also dismissed several other lawsuits filed during President Joe Biden’s administration, including actions against Capital One and Solo Funds.
Moreover, former President Trump quickly dismissed then-CFPB Director Rohit Chopra and appointed acting Director Russell Vought in his place.
The CFPB is currently involved in a legal dispute after a union representing its employees filed a lawsuit opposing a Vought directive that required staff to cease many of the agency’s activities. Another lawsuit seeks to prevent Elon Musk’s Department of Government Efficiency from accessing employee information.