The Consumer Financial Protection Bureau (CFPB) has sued JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), and Zelle’s parent company after accusing them of launching the peer-to-peer payment network without proper consumer safeguards. The CFPB claims this oversight turned Zelle into a haven for fraudsters and often left victims without enough support or reimbursement.
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The CFPB’s lawsuit, filed in the U.S. District Court for Arizona, also alleges that the banks failed to address fraud complaints, which left consumers without relief. Indeed, the consumer financial watchdog agency reported that Zelle users have lost over $870 million during the platform’s seven years of operation. Unsurprisingly, Zelle’s operator, Early Warning Services, defended the platform by calling the CFPB’s claims legally flawed and politically motivated.
The lawsuit highlights the growing scrutiny on peer-to-peer payment platforms like Zelle, Venmo (PYPL), and Cash App (SQ). Zelle, which is owned by seven major banks, including Capital One (COF), PNC (PNC), Truist (TFC), and U.S. Bancorp (USB), has faced increased pressure from lawmakers like Senator Elizabeth Warren, who have raised concerns over rising scams and limited consumer protections.
SEC Settles Charges with Wells Fargo
Separately, the SEC has settled charges with Wells Fargo Clearing Services and LPL Financial (LPLA) for failing to provide complete and accurate securities trading information, known as blue sheet data. Both firms agreed to pay a $900,000 civil penalty to resolve the charges. The SEC found that Wells Fargo submitted around 11,195 blue sheet reports containing errors or missing data, which impacted over 10.6 million transactions, due to 15 types of reporting issues. LPL Financial, meanwhile, made at least 3,679 faulty submissions that affected 399,000 transactions as a result of 10 different types of errors.
What Are the Best Bank Stocks to Buy?
Turning to Wall Street, out of the aforementioned bank stocks, analysts think that TFC stock has the most room to run. In fact, TFC’s price target of $51.15 per share implies over 18% upside.
