The Consumer Financial Protection Bureau (CFPB) has dismissed its lawsuit against Early Warning Services, the operator of the Zelle payments network, and three major U.S. banks: JPMorgan Chase, Bank of America, and Wells Fargo. The lawsuit, filed in December, alleged that the companies failed to properly investigate fraud complaints and reimburse victims. In a statement, the CFPB said, “We dismiss 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.” This means the lawsuit cannot be filed again.
Since acting Director Russell Vought took over the CFPB, the agency has dropped several cases brought by his predecessor, Rohit Chopra. The agency is currently embroiled in a controversy after a union representing CFPB employees sued to halt the purging of data that would have happened under Vought and the Department of Government Efficiency. Customers of the three banks have lost more than $870 million since the launch of Zelle in 2017.
Cfpb lawsuit dismissal impacts banks
The service, started to provide bank customers an alternative to peer-to-peer platforms, reported a record volume of transactions last year. The dismissal means the CFPB has agreed never to bring these claims again, eliminating the possibility of recovering funds for consumer relief.
Eric Halperin, former head of enforcement, commented that the decision prevents future consumer claims. A spokeswoman for the Zelle brand welcomed the dismissal, stating that the CFPB lawsuit was “legally and factually flawed.” A JPMorgan spokeswoman added that while “banks play a crucial role in scam prevention and consumer education… this is a national security problem that requires a collective effort across the public and private sectors.”
Lindsey Johnson, president of the American Bankers Association, said, “Banks have consistently followed the law in offering services through Zelle.
In a time when fraud and scam activity is surging, we look forward to collaborating with policymakers to address the root causes of these threats.”
This development marks a significant shift in the CFPB’s approach to enforcement actions under the new leadership, closing the chapter on this high-profile lawsuit.