Big banks get off the hook from Zelle fraud lawsuit

Big banks have escaped a lawsuit from a financial regulator accusing them of not protecting customers from fraud on the payments platform Zelle.

The Consumer Financial Protection Bureau's case against JPMorgan Chase, Bank of America and Wells Fargo was dropped Tuesday, marking the latest Biden-era enforcement to be tossed by the new Trump administration, Law360 reports.

The CFPB didn't provide a reason for dropping the case and didn't immediately respond to ConsumerAffairs's request for comment.

A spokesperson for Zelle, which had record-breaking more than $1 trillion of payments on its platform in 2024, told ConsumerAffairs they welcomed the CFPB's decision and the "lawsuit was without merit, and legally and factually flawed."

In December, the CFPB filed the Zelle fraud case against the three big banks, alleging a lack of safeguards had cost customers more than $870 million in fraud over Zelle's seven-year history.

The Zelle lawsuit is the ninth case the CFPB has scrapped in the past two weeks after the Trump administration has pledged to deregulate, Law360 reports. 

Trump's allies have accused the CFPB of filing a flurry of cases after the election and overstepping its authority.

Since then, the CFPB has largely been dismantled thanks to efforts by Trump's adviser Elon Musk, who plans to launch a payments platform that would've been regulated by the agency on his X social media app, formerly known as Twitter.

But in an about face, the CFPB's incoming director, Jonathan McKernan, said during his confirmation hearing that the agency would continue to enforce its mandate to protect consumers.