CFPB Halts Legal Action Against Major Banks Over Zelle Fraud Allegations

The Consumer Financial Protection Bureau (CFPB) announced on Tuesday the cessation of its legal proceedings against the chief operator of the Zelle payment network and three leading American banks.

Under the leadership of Acting Director Russell Vought, the CFPB has opted to dismiss several cases that were initiated by the former agency head, Rohit Chopra.

Late last year, the CFPB charged the Zelle payment network and its participating banks with allegations of neglecting thorough investigations into fraud complaints and not providing sufficient reimbursements to affected consumers.

Data from the CFPB indicates that customers associated with these three financial institutions have incurred losses exceeding $870 million related to Zelle since its inception in 2017. Zelle emerged as a bank-supported alternative to other peer-to-peer payment systems. In the previous year, it recorded unprecedented transaction numbers for a service of its kind.