Compass Investments

-Zelle and the banks behind the popular payment platform are attracting increasing scrutiny over online fraud, where trillions of dollars are being turned around.

Lawmakers have sent letters to Zelle’s parent company and banks including JPMorgan Chase, Bank of America, Wells Fargo, Capital One, PNC Bank, US Bank and Truist, demanding more information about fraud reported on the social media platform.

In a lawsuit filed under the Trump administration, the Consumer Financial Protection Bureau (CFPB) accused Zelle of failing to provide adequate security measures against fraudulent transactions, allowing fraudsters to exploit vulnerabilities and cause $870 million in damages to hundreds of thousands of consumers.

ow Senator Elizabeth Warren (D-MA), Senator Richard Blumenthal (D-CT) and Representative Maxine Waters (D-CA) are pushing for stronger consumer protections and transparency, emphasizing that JPMorgan Chase, Bank of America and Wells Fargo control 73% of the network.

They demand that banks provide data on the frequency of fraudulent social media transactions, bank reimbursement policies and fraud prevention measures, warning that Zelle’s rapid growth has outpaced its security, leaving millions of people vulnerable.

They urge banks to follow the lead of JPMorgan Chase, which began blocking Zelle’s social media payments back in February.

Inaction, they say, could lead to increased regulation.

A separate investigation by the Permanent Subcommittee on Investigations found that JPMorgan Chase, Bank of America and Wells Fargo have significantly reduced their recovery rates over time, from 62% of disputed transactions in 2019 to 38% in 2023.