The CFPB's lawsuit highlights a significant consumer protection failure, alleging that Zelle's operator and partner banks essentially enabled fraudsters, resulting in over $870 million in losses.
CFPB Director Rohit Chopra emphasized that the rush to launch Zelle compromised essential safeguards, transforming the service into a lucrative opportunity for fraud while neglecting victim support.
One key issue in the fraudulent schemes is the reusability of 'tokens,' which allows scammers to exploit the system by redirecting legitimate payments to their accounts.
The lawsuit points out that banks' failure to share information about fraudulent transactions allowed repeat offenders to evade detection and continue their schemes across various institutions.
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