Over the last few weeks, we’ve seen multiple articles talking about how the new Trump administration plans to cut budgets and the CFPB is not being spared either. The CFPB (Consumer Financial Protection Bureau) is now dropping lawsuits against major credit card issuers. The lawsuit alleged fraud while handling Zelle payments.
Trump CFPB drops lawsuit
As per CNBC, before the Trump administration took over in January, the CFPB had sued Early Warning Services back in December. The lawsuit alleged that the company had failed to properly investigate and reimburse fraud related complaints. The fraud related complaints were pertaining to peer-to-peer payments transfers networks like Zelle.
The CFPB “dismisses 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,” the regulator said in its filing.
The lawsuit refers to complaints from customers of three banks, namely JP Morgan Chase, Wells Fargo and Bank of America. As per the CFPB, customers have lost over $870 million since the launch of Zelle in 2017.
Also, the cases were dismissed with prejudice, with the federal agency shutting the door for possible clawback of lost funds.
Since the recent cases were dismissed with prejudice, the CFPB has agreed to never bring these claims again, shutting off the possibility of clawing back funds for consumer relief, former head of enforcement Eric Halperin told CNBC last week.
JP Morgan and the Consumer Bankers association also welcomed the judgment.
A JPMorgan spokeswoman said 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.”
The Pundit’s Mantra
It’s no surprise that a spokesperson for Zelle welcomed the judgment. After acting director Russell Vought took over from Rohit Chopra, the going hasn’t been smooth for the agency. A union representing the agency’s employees has already sued the agency. The lawsuit pertains to the mass layoffs owing to the Department of Government Efficiency (DOGE), run by Elon Musk.
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