The Consumer Financial Protection Bureau is investigating major U.S. banks for their handling of customer funds on the peer-to-peer payments platform Zelle Network, the Wall Street Journal reported on Wednesday.
The probe focuses on JPMorgan (NYSE: JPM), Bank of America (NYSE: BAC), and Wells Fargo (NYSE: WFC) among other large banks, the report said, citing people familiar with the matter.
Last week, JPMorgan disclosed in a filing that it was responding to the CFPB’s inquiries regarding Zelle and was considering whether to sue a U.S. consumer watchdog over the agency’s inquiries.
In addition, Wells Fargo has previously disclosed in public filings that government authorities have been probing the handling of customer disputes via Zelle.
The proliferation of fraud and scams on Zelle, which is owned by seven major banks including JPMorgan and Bank of America, has drawn attention from U.S. lawmakers including Democratic Senator Elizabeth Warren, and regulators concerned about consumer protection.
Banks have argued that covering the cost of scams will encourage more fraud and potentially cost billions of dollars.
Spokespeople for JPMorgan, Wells Fargo, BofA, and the CFPB declined to comment.
In a statement, Early Warning Services, the operator of Zelle, said it has “proactively taken steps to go above the law by leading the industry in scam reimbursement efforts,” and noted that 99.95% of transactions are completed without any reports of fraud or scams.
Senator Richard Blumenthal, a Democrat who chairs a U.S. Senate subcommittee focused on investigations, called on the CFPB on Monday to investigate dispute resolution practices at Early Warning Services, JPMorgan, Wells Fargo, and BofA.
That request followed a report from his committee which found reimbursements for unauthorized transactions on Zelle fell “significantly” over five years.
“Zelle and the banks that own it have failed to fully safeguard consumers from a growing threat of scams and fraud,” Blumenthal said. “I look forward to the CFPB reviewing our findings and conducting a thorough investigation.”
(Source: Reuters)
Mary Lee is a freelance writer and journalist based in Toronto, Canada. She holds an M.S. degree in business and economic journalism from Columbia University’s Graduate School of Journalism in New York and a certificate in digital marketing from the University of Toronto.
