CFPB sues three largest US banks and Zelle for tolerating fraud

The U.S. Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against three of the country's largest banks - JPMorgan Chase, Bank of America and Wells Fargo - as well as payment platform operator Zelle. The CFPB alleges that these institutions enabled widespread fraud on the Zelle platform, resulting in more than $870 million in losses over its seven years of operation. The accused entities, however, dispute that figure.

Zelle Fraud: A problem the banks ignored

According to the CFPB, the accused banks neglected key measures to protect customers from fraud, which created an ideal environment for fraudsters. CFPB Director Rohit Chopra called Zelle a "gold mine for fraudsters" where victims often have no chance of getting their money back.

The CFPB said in its lawsuit that customers who filed complaints about the scams were often ignored or told to contact the scammers themselves. It also alleges that banks failed to properly investigate complaints or provide legally required…