Catenaa, Sunday, November 17, 2024- Bank of America (BofA), the second-largest US bank by total assets, is bracing for up to $800 million in losses due to ongoing investigations by federal regulators into its handling of Zelle network transactions.
In a recent filing with the US Securities and Exchange Commission (SEC), the bank revealed that the Consumer Financial Protection Bureau (CFPB) is probing its processing of electronic payments through Zelle.
The CFPB has raised concerns about BofA’s practices regarding reimbursements for customers defrauded via the Zelle network, with the possibility of an enforcement action or litigation.
Additionally, BofA is in discussions with several unnamed federal regulators about its anti-money laundering and sanctions compliance programs, which could lead to public orders.
The investigation also involves JPMorgan Chase and Wells Fargo, with regulators examining whether the banks are reimbursing fraud victims and addressing scammer accounts adequately.
Zelle, a popular peer-to-peer payment platform, has drawn attention from U.S. lawmakers due to concerns over fraud and reimbursement practices.
A Senate Permanent Subcommittee on Investigations report from July found that BofA, Wells Fargo, and JPMorgan Chase collectively failed to reimburse $880 million in disputed Zelle transactions between 2021 and 2023.
The report indicated that the three banks reimbursed victims only 38% of the time for reported Zelle scams in 2023, down from 62% in 2019. The situation highlights growing concerns about fraud and accountability within digital payment networks.
