Trump CFPB Drops Case against Zelle, Siding with Banks Over Defrauded Users
Move increases risk of fraud and scams for millions of digital app users
By Christine Chen Zinner
Today, the Trump-appointed CFPB leadership dropped its case against digital payment app Zelle, a joint venture between Wells Fargo, JPMorgan Chase, and Bank of America, delivering a de facto pardon to the company for failing to protect its users from fraud and identity theft that cost customers more than $870 million over seven years.
The move comes only a day before the Republican Senate is expected to vote on legislation to permanently weaken oversight of digital payment apps at a time when nearly 75 percent of people in the country use payment apps like Zelle, PayPal, Venmo, and ApplePay to make payments on their phone.
Musk will profit personally from CFPB and Senate actions
Both of these actions by the Trump administration and the Republican-led Congress will serve the interests of Big Tech and Elon Musk in particular, allow fraud to fester, and potentially expose people’s private data to criminals. Musk personally stands to gain from weaker oversight because his X social media platform has launched a new payment function in partnership with Visa.
The dropped case was previously filed against the nation’s three largest banks for failing to protect app users from widespread fraud and risky activity on payment app Zelle, the most widely available peer-to-peer payment network. While digital payments are a convenient payment method, the three financial institutions rushed their payment service Zelle to market in 2017 without effective safeguards and usage standards to protect their users. Zelle users faced identity fraud due to the lack of verification standards. Zelle also ignored complaints about fraud and inaccuracy and users routinely faced difficulty getting Zelle to address disputed or fraudulent charges.
The CFPB brought this suit to protect users from the unfair and deceptive practices on the Zelle app that affected millions of users. The Trump surrender in this case lets the banks and their payment app continue to ignore customer complaints about shoddy treatment and allowing widespread reported fraud to proliferate.
Indeed, last week the Trump CFPB dropped seven enforcement actions that would have returned money to people defrauded by Wall Street and other shady actors. Today’s capitulation gives a green light to other payment apps that defraud users or leave their personal data unprotected. People deserve protection from often unfair and deceptive practices by payment apps and banks and other financial predators, but Trump’s CFPB leadership has already hamstrung the agency’s once-effective consumer response system that provided a measure of accountability for Zelle users.
Senate Republicans seek permanent bar to effective payment app oversight
The Republican-led Senate will vote tomorrow to rescind a CFPB measure that would allow much-needed oversight over nonbank digital payment apps, such as PayPal, Venmo, CashApp, and ApplePay to make sure they follow consumer protection laws and do not engage in risky practices and lets the CFPB protect the millions of users from fraud, personal data harvesting and identity theft, and arbitrary account freezes and deactivations.
The Senate is taking the very first congressional vote on the role of the CFPB since Trump and Elon Musk besieged the agency, slashing its funding, purging its staff, freezing enforcement, and shuttering its headquarters. The Senate has a choice to stand with Big Tech, Wall Street, and other financial wrongdoers or stand with people that need safe and affordable financial products and not have their pockets picked by financial predators. Dropping the Zelle case at the same moment the Senate is voting to eliminate digital payment app protections is a win for Big Tech and Wall Street banks over everyday people. Any time we take out that app to pay for our necessities, we will be on our own.
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