JPMorgan, Wells Fargo, BofA facing federal lawsuit over Zelle payment network fraud [Video]

A federal regulator sued JPMorgan Chase, Wells Fargo and Bank of America on Friday, claiming the banks failed to protect hundreds of thousands of consumers from rampant fraud on the popular payments network Zelle, in violation of consumer financial laws.

In the federal civil complaint, the Consumer Financial Protection Bureau asserts that the banks rushed to get the peer-to-peer payments platform to market without effective safeguards against fraud and then, after consumers complained about being defrauded on the service, largely denied them relief.

“Shortly after Zelle’s launch, significant problems, including fraud being perpetrated on consumers using Zelle, quickly became apparent. But defendants did not take meaningful action to address these clear defects for years,” according to the complaint.

The CFPB claims that the banks violated federal consumer financial laws governing electric funds transfers, which require banks conduct “reasonable investigations” when consumers report transaction errors, and the agency’s prohibition on unfair …