JPMorgan Chase announced on Friday that it is contemplating legal action against the Consumer Financial Protection Bureau (CFPB) due to the agency’s ongoing investigations into the Zelle payment app. Since its launch in 2017, Zelle has become the leading peer-to-peer payment network in the U.S., owned by major banks including JPMorgan and Bank of America. However, the app has faced scrutiny from U.S. lawmakers and regulators over the increasing incidence of fraud and scams.
According to a recent filing, JPMorgan stated that it is responding to the CFPB’s queries regarding Zelle. The CFPB has presented the bank with options to either settle the issue or face enforcement action. “The firm is evaluating next steps, including litigation,” JPMorgan said in the filing.
A spokesperson for JPMorgan emphasized that the bank already exceeds legal requirements by reimbursing customers for all unauthorized transactions and even some types of scams. The spokesperson also indicated that the CFPB should expect challenges to ensure its actions remain within legal bounds. The CFPB, however, declined to comment on the matter.
A report from a U.S. Senate committee highlighted that the percentage of consumers reimbursed for disputed fraud transactions fell to 38% in 2023 across JPMorgan, Bank of America, and Wells Fargo, down from 62% in 2019. Federal regulations mandate that banks reimburse customers for unauthorized payments, such as those resulting from hacked accounts. However, banks have sometimes resisted repaying customers who were deceived into authorizing payments themselves.
JPMorgan CEO Jamie Dimon has previously argued that it is unreasonable to expect banks to refund transfers resulting from scams where customers were tricked into approving payments. Banks maintain that covering such costs could encourage more fraud and potentially result in billions of dollars in losses.
Currently, over 100 million people have access to Zelle through their U.S. bank accounts. As JPMorgan evaluates its options, including potential litigation, the broader implications for consumer protection and the responsibilities of financial institutions in combating fraud remain a significant area of concern for regulators and lawmakers alike.
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