11:07 AM EST, 12/20/2024 (MT Newswires) -- (Updates with Zelle's response in the fifth and sixth paragraph.)

The Consumer Financial Protection Bureau said Friday it was suing the operator of Zelle, Early Warning Services, and three major banks, Bank of America ( BAC ) , JPMorgan Chase ( JPM ) , and Wells Fargo ( WFC ) , for allegedly failing to protect consumers from fraud on the Zelle payment network.

Customers of these banks have lost over $870 million in the seven years the network has been operating due to fraud, the Bureau said.

The lawsuit claims that fraud complaints were ignored or mishandled, and customers were often told to contact fraudsters directly. The Bureau is seeking to stop these practices, obtain compensation for affected consumers, and impose penalties, it said.

"The nation's largest banks felt threatened by competing payment apps, so they rushed to put out Zelle. By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves," CFPB Director Rohit Chopra said.

"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," the company told MT Newswires in an emailed response.

"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 said, adding that it 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."

Bank of America ( BAC ), JPMorgan Chase ( JPM ), and Wells Fargo ( WFC ) didn't immediately respond to MT Newswires' requests for comment.

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