In case you missed it, Cash App and Zelle have been in the CFPB’s crosshairs recently. First, the CFPB sued the operator of Zelle, along with the three large banks that own it. Then, the CFPB issued a Consent Order and civil money penalty involving the creator of Cash App. Both involved failures across Regulation E and heavy criticism of the various ways these apps contributed to high incidents of fraud.
The CFPB alleges that, in the rush to launch Zelle (in order to compete with other digital payment apps), a criminal “goldmine” was created which lacked effective anti-fraud measures. Even when significant issues quickly became apparent, nothing was done to address them. When consumers reported issues, they were sometimes instructed to contact the fraudster to get their money back. There were allegedly millions of complaints relating to hundreds of millions of dollars of fraud.
In the case of Cash App, the CFPB alleges that Cash App ...created the conditions for fraud to proliferate...and disregarded its responsibilities to investigate errors. The CFPB stated that Cash App’s Terms of Service tried to pass along error resolution responsibilities to the account-holding financial institution. Further, Cash App gave consumers the runaround when it came to reaching actual customer service, which ultimately contributed to even more fraud.
There are obviously a multitude of issues brought forth in these actions and many are related to a lack of accountability and failures in fulfilling error resolution responsibilities under Regulation E. We dove into each of these actions a little deeper in the February issue of our Banking on BCC magazine, so check it out!
Need training on the Regulation E error resolution requirements? Be sure to check out our webinar, “Regulation E: EFT Errors & Disputes”!
Published
2025/02/03
