Americans should be deeply skeptical of a Consumer Financial Protection Bureau lawsuit against the operator of Zelle and participating banks in the final days of the Biden administration, American Bankers Association President and CEO Rob Nichols said.
The CFPB announced today that it had sued Zelle operator Early Warning Services and three banks in federal court for allegedly failing to take steps to protect consumers from fraud on the payments network. The bureau alleges that Zelle’s identity verification methods led bad actors to target network users, that it was too slow to restrict and track criminals that exploited multiple network accounts, and that it ignored fraud complaints. It is asking the court to prevent the defendants from “committing future violations” and is seeking monetary penalties.
In a statement, Nichols said that if the CFPB was really interested in protecting consumers rather than playing politics, “it could have used its substantial budget over the last four years to work with industry and actually educate consumers on how to protect themselves from the growing threat of fraud as the Dodd-Frank Act envisioned.”
“But instead of focusing on the real bad actors — the criminals and scammers preying on everyday Americans — this CFPB has devoted much of its time, energy and resources to attacking banks, often by exceeding its statutory authority and without considering the harm to consumers,” he added.
In a statement responding to the lawsuit, Early Warning Services called the CFPB’s allegations meritless. The company said it made every effort to engage and cooperate with the CFPB but the bureau failed to acknowledge its consumer reimbursement policies already go beyond legal and regulatory requirements. It also noted that Zelle reimburses customers for all instances of fraud as required by the Electronic Funds Transfer Act and Reg E, which the bureau did not dispute.
