JPMorgan says it will challenge CFPB over Zelle enforcement

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WASHINGTON — JPMorgan Chase said in a regulatory filing that it has received inquiries from the Consumer Financial Protection Bureau over fraud on the peer-to-peer payments platform Zelle, and that it might fight any ensuing enforcement action in court.

The inquiries into Zelle comes amid increasing scrutiny in Washington of the payment app and allegations of frequent scams and fraud. Sens. Richard Blumenthal, D-Conn., and Elizabeth Warren, D-Mass., alongside Rep. Maxine Waters, D-Calif., introduced a bill earlier in the day that would make it easier for customers to get refunds when they are tricked into authorizing a payment on Zelle and other payment platforms to a bad actor. 

The CFPB is also looking into Zelle, according to the JPMorgan filing, which came in its quarterly report filed with the Securities and Exchange Commission on Friday evening. JPMorgan — alongside a number of other large banks, including Wells Fargo and Bank of America — co-owns Early Warning Services, the parent company of Zelle.

JPMorgan said that it is "responding to inquiries" regarding fund transfers on Zelle.

CFPB staff, the bank said, told JPMorgan that it has the authority to file an enforcement action on the subject.

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"The firm is evaluating next steps, including litigation," JPMorgan said in the filing.

In a statement to American Banker, JPMorgan said that, "if necessary, we will not hesitate to seek assistance from courts to uphold the integrity of how these services are provided."

"The CFPB is fully aware we already go above and beyond what the law requires, reimbursing for all unauthorized transactions and even for certain types of scams, so they should expect to be challenged to ensure their actions stay within the bounds of the law," the bank said.

Fraud on the Zelle platform has been the source of growing concern among progressive Democrats in recent years. The Senate permanent subcommittee on investigations held a hearing earlier this month featuring testimony from executives at JPMorgan, Wells Fargo and BofA over Zelle fraud, and simultaneously issued a report detailing the banks' shortcomings in reimbursing victims of fraud.