The CFPB alleges that Zelle and its bank partners have failed to establish adequate safeguards against fraud, resulting in a staggering loss of over $870 million for consumers since Zelle's launch.
According to the CFPB, the design of Zelle allows scammers to exploit vulnerabilities in its identity verification process, making it easier for them to compromise accounts and conduct fraudulent transactions.
The lawsuit underscores a deficiency in Zelle and the banks' efforts to prevent fraud, stating they didn't relay critical information about fraudulent activities between institutions and failed to address the risks despite numerous complaints from consumers.
In response to the CFPB's actions and public pressure regarding rampant scams, the banks began to offer refunds to victims of fraud, showcasing a belated acknowledgment of their obligations to protect consumers.
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