Zelle payment app faces investigation, JP Morgan considers suing regulatory agencies
JPMorgan Chase is considering suing the US consumer regulatory agency over its investigation into the Zelle payment application. Zelle is a leading peer-to-peer payment network in the United States, owned by JPMorgan Chase, Bank of America, and five other major banks. Over 100 million consumers can use Zelle through their Bank of America accounts. The prevalence of fraud and scams on the Zelle website has caught the attention of regulatory agencies. JPMorgan Chase stated that it is evaluating next steps, including litigation. The proportion of consumers from JPMorgan Chase, Bank of America, and Wells Fargo receiving compensation for disputed fraudulent transactions has decreased
According to the financial news app Smart Finance, JPMorgan Chase (JPM.US) stated on Friday that it is considering whether to sue the U.S. consumer watchdog over its investigation into the Zelle payment app.
The bank stated in a document that it is responding to the Consumer Financial Protection Bureau's (CFPB) inquiries into Zelle. Zelle is owned by seven major banks, including JPMorgan Chase and Bank of America. Since its launch in 2017, Zelle has grown to become a leading peer-to-peer payment network in the United States. Over 100 million consumers can use Zelle through their Bank of America accounts.
The proliferation of fraud and scams on the Zelle website has raised concerns among U.S. lawmakers, including Democratic Senator Elizabeth Warren, and regulatory agencies focused on consumer protection.
JPMorgan Chase stated that the CFPB has given them two options: seek a settlement or face enforcement action.
"The company is evaluating next steps, including litigation," the company stated in the document.
A bank spokesperson mentioned in another statement, "The CFPB is well aware that we have gone beyond legal requirements by reimbursing for all unauthorized transactions, even certain types of scams."
The spokesperson added that the CFPB "should have anticipated being challenged to ensure their actions are within the legal scope."
The CFPB declined to comment.
According to a report from the U.S. Senate Committee, the percentage of consumers at JPMorgan Chase, Bank of America, and Wells Fargo who were compensated for disputed fraudulent transactions dropped to 38% in 2023 from 62% in 2019.
Federal regulations require banks to reimburse customers for unauthorized payments, such as if their accounts are hacked. However, in some cases, banks refuse to reimburse customers who have been scammed into making payments themselves.
JPMorgan Chase CEO Jamie Dimon previously told lawmakers that demanding banks to refund transfers for scams where customers approved the payments is unreasonable.
The bank argues that covering the cost of fraud would encourage more fraudulent behavior and could result in billions of dollars in losses
