NEW YORK, Dec. 24 (Xinhua) -- U.S. financial giants Wells Fargo, JP Morgan Chase and Bank of America are being sued by the embattled Consumer Financial Protection Bureau (CFPB) over alleged unchecked fraud on the Zelle payment app, setting up a legal showdown that the incoming Donald Trump administration could quash as soon as next month, the Los Angeles Times has reported.
The three institutions, which co-own the app along with four other large banks, were accused in a lawsuit filed on Friday of rushing to launch the service in 2017 without putting in place proper consumer safeguards in order to compete with popular payment apps such as Venmo. The result, according to the lawsuit, were fraud-related losses of more than 870 million U.S. dollars over the last seven years.
"Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves," said CFPB Director Rohit Chopra.
The 91-page federal lawsuit, which seeks an injunction to prevent future violations of law and monetary relief including restitution, claims that hundreds of thousands of consumers at the three banks made complaints about being defrauded but were "were largely denied relief, and some were even told to try getting their money back by contacting the person who had defrauded them."
The CFPB said the three banks accounted for 73 percent of Zelle activity last year.
