CFPB drops Zelle fraud lawsuit

Catch up quick: The lawsuit, filed in December, alleged that customers of JPMorgan Chase, Bank of America, and Wells Fargo had lost more than $870 million collectively since Zelle launched in 2017, due to fraud vulnerabilities such as limited verification methods and "abandoning consumers" after fraud occurs.

• The CFPB has now dropped multiple lawsuits filed against financial institutions under Rohit Chopra, the agency's previous, Biden-appointed director.

What they're saying: Banks – including the ones associated with the lawsuit – celebrated the move.

• "We welcome the CFPB's decision to drop its lawsuit against the Zelle network," a Zelle spokesperson told Axios in a statement. "As we've said before, this lawsuit was without merit, and legally and factually flawed."
• "As we explained when the CFPB first brought this suit in December, banks have and consistently followed the law in offering services through Zelle," Consumer Bankers Association (CBA) President and CEO Lindsey Johnson said in a statement. "This service is extremely valued and critical to millions of Americans across the country to send and receive money."
• "We view this as positive for banks as it should make them more comfortable expanding peer to peer and instant payment offerings," TD Cowen Washington Research Group said on Tuesday. "The problem is the risk of similar lawsuits will not disappear absent legislation or a court decision."

• JP Morgan, Wells Fargo, and Bank of America did not respond to Axios' immediate requests for comment.

The other side: Chuck Bell, advocacy program director at Consumer Advocates, said in a statement that the move represents a troubling direction for the CFPB under Trump.

• "Dismissing this lawsuit against the big banks that own Zelle is another troubling sign that the CFPB's new leadership is dramatically pulling back from enforcing the law and protecting consumers who have been mistreated by banks and other financial firms," said Bell.