The Consumer Financial Protection Bureau has dropped a lawsuit against JPMorgan Chase, Bank of America and Wells Fargo which had accused the banks of allowing fraud to "fester" on P2P payments platform Zelle.
The CFPB sued the three lenders and Early Warning Services - the bank-owned operator of the Zelle network - late last year. Now, in a filing in US District Court for the District of Arizona, the watchdog has dismissed the case with prejudice, which means it cannot be reopened.
Launched in 2017, Zelle is hugely popular, with over 150 million enrolled users, who sent more than $1 trillion through the platform last year.
However, according to the CFPB suit, the banks and Early Warning Services failed to protect users from "widespread fraud". It accused them of rushing out Zelle to compete with the likes of Venmo and CashApp without implementing effective safeguards for users. This, says the watchdog, saw customers of the three banks named lose more than $870 million over the network’s seven-year existence.
In recent weeks, the CFPB has pulled several lawsuits - including against Capital One and Solo Funds - filed during President Joe Biden’s term.
Meanwhile, President Trump quickly fired director Rohit Chopra, replacing him with acting Director Russell Vought.
The agency is also in a legal battle after a union representing CFPB employees sued in response to a Vought order that staff halt much of the watchdog's activities. A separate suit asked a judge to block Elon Musk's Department of Government Efficiency from accessing employee information.