JPMorgan considers suing consumer watchdog over Zelle
Fraud and scams on the payments app have drawn attention from US legislators and regulators
04 August 2024 - 14:00
byNupur Anand
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New York — JPMorgan Chase said on Friday it is considering whether to sue a US consumer watchdog over the agency’s inquiries into the Zelle payment app.
The bank said in a filing it is responding to queries from the Consumer Financial Protection Bureau (CFPB) over Zelle, which has grown to become the leading US peer-to-peer payment network since launching 2017. Zelle is owned by seven major banks, including JPMorgan and Bank of America.
The proliferation of fraud and scams on Zelle has drawn attention from US legislators including Democratic senator Elizabeth Warren and regulators concerned about consumer protection.
JPMorgan said it has been given options by the CFPB to either pursue a settlement or face an enforcement action.
“The firm is evaluating next steps, including litigation,” it said in the filing.
“The CFPB is fully aware we already go above and beyond what the law requires, reimbursing for all unauthorised transactions and even for certain types of scams,” a bank spokesperson said in a separate statement.
The CFPB “should expect to be challenged to ensure their actions stay within the bounds of the law,” the spokesperson added.
The CFPB declined to comment.
The percentage of combined consumers who were reimbursed for transactions that were disputed as fraud fell to 38% in 2023 across JPMorgan, Bank of America and Wells Fargo, according to a US Senate committee report. That was down from 62% in 2019.
Federal rules require banks to reimburse customers for unauthorised payments, for instance if their accounts were hacked. But in some cases, banks have resisted paying back customers who were tricked into making the payments themselves.
JPMorgan CEO Jamie Dimon has previously told legislators that it was unreasonable to require banks to refund transfers from scams in which customers were tricked into approving payments.
Banks have argued that covering the cost of scams will encourage more fraud and potentially cost billions of dollars.
More than 100-million people have access to Zelle via their US bank accounts.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
JPMorgan considers suing consumer watchdog over Zelle
Fraud and scams on the payments app have drawn attention from US legislators and regulators
New York — JPMorgan Chase said on Friday it is considering whether to sue a US consumer watchdog over the agency’s inquiries into the Zelle payment app.
The bank said in a filing it is responding to queries from the Consumer Financial Protection Bureau (CFPB) over Zelle, which has grown to become the leading US peer-to-peer payment network since launching 2017. Zelle is owned by seven major banks, including JPMorgan and Bank of America.
The proliferation of fraud and scams on Zelle has drawn attention from US legislators including Democratic senator Elizabeth Warren and regulators concerned about consumer protection.
JPMorgan said it has been given options by the CFPB to either pursue a settlement or face an enforcement action.
“The firm is evaluating next steps, including litigation,” it said in the filing.
“The CFPB is fully aware we already go above and beyond what the law requires, reimbursing for all unauthorised transactions and even for certain types of scams,” a bank spokesperson said in a separate statement.
The CFPB “should expect to be challenged to ensure their actions stay within the bounds of the law,” the spokesperson added.
The CFPB declined to comment.
The percentage of combined consumers who were reimbursed for transactions that were disputed as fraud fell to 38% in 2023 across JPMorgan, Bank of America and Wells Fargo, according to a US Senate committee report. That was down from 62% in 2019.
Federal rules require banks to reimburse customers for unauthorised payments, for instance if their accounts were hacked. But in some cases, banks have resisted paying back customers who were tricked into making the payments themselves.
JPMorgan CEO Jamie Dimon has previously told legislators that it was unreasonable to require banks to refund transfers from scams in which customers were tricked into approving payments.
Banks have argued that covering the cost of scams will encourage more fraud and potentially cost billions of dollars.
More than 100-million people have access to Zelle via their US bank accounts.
Reuters
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