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The Consumer Financial Protection Bureau (CFPB) dropped its suit against JPMorgan Chase (JPM-3.53%), Bank of America (BAC-5.50%), and Wells Fargo (WFC-4.00%) on Tuesday over their handling of fraud on the peer-to-peer payments network Zelle.
The regulatory agency had alleged in its lawsuit, filed in U.S. District Court in Arizona in December under the Biden Administration, that failures to stop fraud perpetrated through Zelle by some of the nation’s largest banks resulted in hundreds of millions of dollars in losses for customers.
But President Trump and his administration are trying to gut the agency and have been dropping suits it filed under Biden left and right. They dismissed the Zelle suit “with prejudice” in a filing Tuesday, according to CNBC.
The decision appears to be part of acting CFPB Director Russell Vought’s mission to all but close the agency, which conducted mass firings last month. An employee union sued to stop the layoffs.
Former CFPB Director Rohit Chopra, who worked under the Biden Administration, said in December that agency was suing the banks, which “rushed to put out Zelle.”
“By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves” Chopra continued.
The lawsuit claims there was “significant fraud” across the Zelle network, and that the company has “failed to take sufficient fraud-prevention actions.” The CFPB claimed that failure to put in basic safeguards resulted in hundreds of thousands of complaints and over $290 million in fraud losses by Bank of America customers, more than $360 million for Chase clients, and over $220 million for Wells Fargo customers.
JPMorgan Chase said the suit was “a last-ditch effort in pursuit of their political agenda” and it was evidence the CFPB was “overreaching its authority by making banks accountable for criminals.”
Zelle said the suit was “legally and factually flawed, and the timing of this lawsuit appears to be driven by political factors unrelated to Zelle.”
—Rocio Fabbro contributed to this article.