Known as "America's most widely available peer-to-peer payment network," Zelle was introduced in 2017 and is run by EWS. It provides nearly instantaneous electronic money transactions to more over 143 million users.

To compete with payment applications like Venmo, PayPal, and CashApp, the accused banks—JP Morgan Chase, Bank of America, and Wells Fargo—are accused of "hurrying" Zelle to market.

According to CFPB Director Rohit Chopra, this led to "serious failures in fraud prevention and customer protection," including insufficient identity verification techniques that produced a "goldmine for criminals."

On December 20, the CFPB issued a statement accusing the defendants of failing to take prompt, appropriate, and effective steps to prevent, detect, limit, and address fraud on the Zelle Network, thereby violating "the Consumer Financial Protection Act's (CFPA) prohibition on unfair acts or practices."

Furthermore, "the complaint also alleges that Bank of America, JP Morgan Chase, and Wells Fargo violated the Electronic Fund Transfer Act and its implementing Regulation E by failing to properly treat incorrect and unauthorised Zelle transfers as errors under the law and failing to conduct reasonable investigations of notices of errors submitted by consumers regarding Zelle transactions."

Customers of the three banks mentioned have allegedly lost "more than $870 million over the network's seven-year existence" as a result of these failures, according to the US watchdog.

"Bring the defendants into compliance with the law, consumer redress, and civil money penalties," the agency states in its closing statement.

Prior to its anticipated reorganization under the upcoming Trump administration, the CFPB is advancing its goal with this case.

The regulator recently finalized a regulation aimed at monitoring large tech businesses participating in digital wallets and payment applications in consumer finance, and penalized VyStar Credit Union $1.5 million for the poorly managed implementation of its online banking system.