CFPB Zelle Lawsuit: Payment Platform Sued Over ‘Widespread Fraud’

On December 20, 2024, the Consumer Financial Protection Bureau (CFPB) hit the operator of Zelle and three of its owner banks with a lawsuit claiming they let down customers and violated federal law by allowing fraud to run rampant on the popular payment platform.

According to the Zelle lawsuit, fintech company Early Warning Services (EWS), Bank of America, JPMorgan Chase and Wells Fargo are to blame for customers collectively losing over $870 million to fraud since Zelle was first launched in 2017. The case says the defendants did little to prevent criminals and fraudsters from exploiting the platform and essentially left victims to fend for themselves without any recourse.

The CFPB Zelle lawsuit, which is not a class action (more on this below), is still in its early stages—so if you’ve heard rumors about a settlement, it’s a little too early to determine whether affected Zelle users will get any money back.

In the meantime, you’ve come to the right place for the details about the lawsuit, what it could mean for consumers, and when Zelle users may need to act. Let’s start with the first question on everyone’s mind…

How do I file a Zelle lawsuit claim?

At this point, it’s still too early to fill out a Zelle lawsuit claim form. The case was only just filed and likely still has a long way to go before it can be resolved.

If a settlement is eventually reached, the CFPB or one of the defendants may automatically send you a check in the mail if their records indicate that you are eligible for a refund or payment. In situations where the CFPB needs additional information to determine whether someone is eligible for redress, the Bureau will mail claim forms to potentially affected individuals or send a notice to complete an online claim form.

In other words, if there is a Zelle lawsuit settlement that you could be eligible for, you’ll likely be directly contacted.

So, is this a Zelle class action lawsuit?

The CFPB Zelle lawsuit is not a class action. The Consumer Financial Protection Bureau has authority to file what’s called enforcement actions in state or federal court over alleged violations of consumer financial protection laws. In some ways, an enforcement action is similar to a class action in that it can provide redress for a group of harmed individuals.

For instance, a recent CFPB enforcement action resulted in the operator of Cash App being ordered to pay up to $120 million to consumers who were harmed by the company’s alleged failure to prevent and investigate fraud on its platform.

Through its recent enforcement action against Zelle, the CFPB seeks to order the defendants to stop any unlawful conduct and compensate affected consumers. The lawsuit is also looking to require the defendants to pay a civil penalty into the CFPB’s victims relief fund, which is used by the Bureau to provide money for people who were harmed by violations of financial protection laws.

In the years prior to the CFPB Zelle case, there have been a handful of class action lawsuits filed against the owners of the platform. A Zelle lawsuit against Bank of America was recently resolved in favor of the defendants. Chase Bank also faced a lawsuit over Zelle fraud that was sent to arbitration, and a proposed class action against Wells Fargo was voluntarily dismissed by the plaintiff.

What is the CFPB Zelle lawsuit about, exactly?

The lawsuit claims Early Warning Services (a fintech company owned by seven of the largest banks in the United States), Bank of America, JPMorgan Chase and Wells Fargo ran afoul of the Consumer Financial Protection Act by failing to prevent, detect and respond to fraud on the Zelle platform.

According to the case, the defendants essentially rushed Zelle to market without proper safeguards to protect customers from fraud—and then largely refused to provide any assistance to fraud victims, in some cases suggesting they try to recover their money from the criminals themselves.

As a result, the suit says, scammers and fraudsters flocked to the platform to take advantage of its limited verification methods. Per the case, Zelle made it easy for bad actors to create multiple new accounts, mask their identities, and steal money from users by switching the deposit accounts linked to victims’ phone numbers or emails. Meanwhile, the defendants allegedly advertised the platform as “safe,” “secure” and “backed by the banks,” which the suit says gave consumers a false sense of security.

The lawsuit goes on to claim that the defendants did not do enough to stop fraud after it was detected. Banks on the Zelle network allegedly failed to share information with other banks, which allowed bad actors to carry out fraud at multiple institutions, duping victim after victim, without being detected.

Bank of America, Chase and Wells Fargo have also been accused of violating the Electronic Fund Transfer Act and Regulation E by failing to properly investigate and respond to customers’ fraud and error reports. Per the case, despite receiving hundreds of thousands of customer complaints, the banks did little to rein in the widespread fraud, timely report it, and provide legally required assistance and compensation to victims.

In response to the allegations, a Zelle spokesperson issued the following statement:

The CFPB’s attacks on Zelle are legally and factually flawed, and the timing of this lawsuit appears to be driven by political factors unrelated to Zelle. Zelle leads the fight against scams and fraud and has industry-leading reimbursement policies that go above and beyond the law. The CFPB’s misguided attacks will embolden criminals, cost consumers more in fees, stifle small businesses and make it harder for thousands of community banks and credit unions to compete. Zelle is relied upon by 143 million enrolled American consumers and small businesses, and we are fully prepared to defend this meritless lawsuit to ensure their service does not suffer.” 

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