Big Banks Don't Want to Stop Fraud on Zelle
JPMorgan Chase threatens to sue CFPB to prevent consumer protection regulations
I’ve written before about how America’s Big Banks (Chase, Wells Fargo, Bank of America) aren’t really all that interested in protecting consumers from fraud on the money exchange platform they own - Zelle.
Reports suggest that fraud involving money sent by Zelle often does not result in money being returned to the ripped-off consumer.
One might think this would concern banks.
But it doesn’t.
A story at CNBC explains how an emboldened Chase is working overtime to push back on what it perceives as oppressive regulation.
The lender disclosed that the Consumer Financial Protection Bureau could punish JPMorgan for its role in Zelle, the giant peer-to-peer digital payments network. The bank is accused of failing to kick criminal accounts off its platform and failing to compensate some scam victims, according to people who declined to be identified speaking about an ongoing investigation.
In response, JPMorgan issued a thinly veiled threat: “The firm is evaluating next steps, including litigation.”
Why sue?
Well, Chase (and Wells and BofA) is in the habit of NOT reimbursing consumers who are victims of fraud via the Zelle platform.
But the three banks collectively reimbursed just 38% of those claims, according to a July Senate report that looked at disputed unauthorized transactions.
And the banks are not eager to either A) tighten up security on the platform they own (costing money and possibly lost transactions) or B) reimburse consumers and pursue fraudsters for the stolen cash (also costing money).
Instead, they want to continue processing the $806 billion that flows across the platform each year.
And, of course, they want to do so at the lowest possible cost.
The Big Banks win, consumers lose.
