CFPB lets banks off the hook and drops Zelle lawsuit
The Consumer Financial Protection Bureau (CFPB) today dismissed a lawsuit against Early Warning Services, the company that runs the Venmo-like Zelle payment platform, as well as the three banks that share ownership of it, reports CNBC.
The CFPB, which enforces regulations against the financial services industry, had claimed in its December 2024 lawsuit that the organizations had not effectively protected Zelle users “from widespread fraud,” causing customers of Bank of America, JPMorgan Chase, and Wells Fargo to lose a combined $870 million since Zelle launched in 2017.
The regulator’s filing says it is dismissing its court case with prejudice, meaning that it can’t bring its claims again. Eric Halperin, the CFPB’s former head of enforcement, told CNBC that doing so also means there’s no way “of clawing back funds for consumer relief.” Representatives from Zelle, JPMorgan, and the Consumer Bankers Association each praised the ruling in statements to the outlet.
President Donald Trump’s administration, including Elon Musk’s Department of Government Efficiency (DOGE), have pushed hard to effectively shut down the CFPB. The agency has only published one enforcement action since President Donald Trump’s inauguration, and under acting Director Russell Vought it’s dropped several cases that were brought by its Biden-era leader, Rohit Chopra. Agency employees are currently fighting in court to halt the move, alleging they’ve been prevented from carrying out legally mandated duties — including responding to urgent consumer complaints.
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