Zelle Involvement
Zelle is the peer-to-peer payments platform that has attracted attention for its role in scams and fraudulent transactions.
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According to sources familiar with the situation, the Wall Street Journal issued a report regarding the investigation.
Extensive Investigation
The extensive investigation aims to evaluate the lenders’ responses to customer disputes involving Zelle transactions.
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Friday, JPMorgan (JPM) made it clear that it is thinking about filing a lawsuit against the CFPB.
CFPB Lawsuit
JPM’s lawsuit is due to the inquiries into the Zelle payment app in response to the investigation.
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Zelle is owned by JPMorgan Chase, Wells Fargo (WFC), Bank of America (BAC), and four other banks.
Bank Obligations
Banks are required to repay customers for transactions they didn’t approve.
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However there is no legal safeguard for customers who begin the transactions on their own.
CFPB’s Focus
Are the banks making enough of an effort to close down accounts overseen by scammers?
Lawrence Jackson
This is a vital focal point of the CFPB’s broad and sweeping investifation.
Identity and Background Checks
According to the WSJ, the consumer watchdog is also looking into how thoroughly banks perform their checks.
X user CFPB
This includes checking the identities and backgrounds of deposit-account customers who later commit fraud.
Zelle Guideline Changes
Zelle changed its guidelines to help victims of specific imposter scams.
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However, fraud casualties say they’re actually being denied repayments.
Advanced Talks
Government legislators have been looking for answers on who meets the criteria for these protections.
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The banks that own Zelle, including BAC, JPM, and WFC, were in advanced talks for a plan to remedy this.
Customer Refunds
These plans included refunding customers and each other when customers are duped into paying scammers using the network.
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This was outlined in a report in the Journal late in 2022.
Warren Questions CEO
Consequently, Sen. Elizabeth Warren (D-MA) had called out Wells Fargo (WFC) CEO Charles Scharf for being “evasive and misleading” with her inquiries.
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The hearing was conducted in regards to increased fraud affecting the bank’s customers on Zelle.
Extent of Scams
Customers of Zelle have reported being scammed by imposters who claim to be part of government agencies or banks.
X user Zelle
The response from banks has claimed that covering the costs of these scams would only encourage further fraud.
Additionally they claimed that the potential cost could reach into the billions of dollars.