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The Consumer Financial Protection Bureau (CFPB) has dropped its lawsuit against the company that runs the Zelle payment platform and three major US banks.

The lawsuit, which was originally filed in December, accused JPMorgan Chase, Bank of America, and Wells Fargo of failing to protect consumers from fraud involving Zelle.

The move comes as federal agencies, including the CFPB, scale back enforcement actions following the return of President Donald Trump to office.

The lawsuit claimed that these banks did not put enough safeguards in place when launching the Zelle platform, which led to widespread fraud.

Consumers who were defrauded by Zelle often struggled to get their money back, as the banks were accused of not offering proper relief.

Early Warning Services (EWS), a fintech company that operates Zelle, was also named in the lawsuit.

According to AP, EWS is owned by seven US banks, including the three largest financial institutions on the Zelle network: JPMorgan Chase, Bank of America, and Wells Fargo. In 2023, these three banks accounted for 73% of all activity on Zelle.

However, a filing in the US District Court for the District of Arizona on Tuesday revealed that the CFPB was dismissing its lawsuit against EWS, JPMorgan Chase, Bank of America, and Wells Fargo with prejudice.

This decision comes just days after the CFPB dropped several other lawsuits against companies like Capital One, Rocket Homes, and Vanderbilt Mortgage and Finance.

Trump Defends CFPB Overhaul Amid Lawsuit Drop and Agency Shutdown

These lawsuits were initially filed under the CFPB's previous director, Rohit Chopra, who was removed by President Trump just weeks ago.

Since then, the CFPB has faced significant turmoil, with the White House halting most of the agency's work, closing its headquarters, and planning to fire a large portion of its staff.

Trump has publicly defended his administration's actions against the CFPB, even suggesting that the agency was "set up to destroy people."

However, supporters of the CFPB argue that the agency plays a critical role in protecting consumers from predatory business practices. The CFPB is not the only federal agency scaling back enforcement actions under the new administration.

The US Securities and Exchange Commission (SEC) has also paused or closed several lawsuits against cryptocurrency platforms, signaling a shift toward a more crypto-friendly stance.

The lawsuit against the three banks and EWS accused them of rushing Zelle to market to compete with other payment platforms like PayPal's Venmo and Block's Cash App, NY Post said.

This lack of proper consumer protection led to a surge in fraud complaints, many of which were ignored or dismissed by the banks. Consumers who had their funds stolen were often told to ask the fraudsters for their money back.

Representatives from the CFPB, Wells Fargo, and EWS did not immediately respond to requests for comment.

However, JPMorgan stated that combating fraud requires cooperation between the public and private sectors and expressed a willingness to work with others to address these issues. Bank of America declined to comment on the situation.

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Lawsuit