The US Consumer Financial Protection Bureau (CFPB) announced on Friday that it has filed a lawsuit against JPMorgan Chase Bank, Bank of America, and Wells Fargo Bank for allowing fraud to occur on the Zelle platform.

The lawsuit contains ten counts of offenses against the banks for failing to address frauds under sections 1031 and 1036 of the 2010 Consumer Financial Protection Act (CFPA), which prohibit the “unfair, deceptive or abusive practices” in providing consumer financial products or services. The lawsuit listed the banks’ failures to implement safeguards such as identity verification methods, a system between banks for reporting fraud, identifying red flags, and investigating customer complaints.

The CFPB stated that the accused banks rushed to market Zelle without implementing proper consumer safeguards. As a result, thousands of Zelle users have filed fraud complaints and received little to no assistance.

In a Friday press release, CFPB director Rohit Chopra detailed the fraud that occurred via Zelle. Director Chopra said that the CFPB lawsuit is the result of a lengthy investigation launched in 2021. The investigation found that the Zelle platform was “a goldmine for criminals.” Zelle made it easy for criminals to move money quickly, and many fraud victims have yet to get their money back.

The 2010 CFPA, also known as the Dodd-Frank Act, is the enabling statute of the CFPB, which creates and gives certain statutory powers to the bureau. The Dodd-Frank Act seeks to protect consumers from fraud and deception through monitoring and reporting systems. Additionally, the Dodd-Frank Act established the Civil Penalty Fund for victim relief. The fund provides compensation to consumers who have been harmed by unlawful business practices.

The CFPB lawsuit seeks to stop fraudulent conduct and provide remedies to harmed customers. To obtain redress for consumers, the CFPB will seek compensation to be placed in the Civil Penalty Fund.