JPMorgan Chase No Recourse for Fraud via Zelle Class Action

This class action brings suit against JPMOrgan Chase Bank, NA and Early Warning Services, LLC, which does business as Zellepay.com, or the money transfer service Zelle. The complaint alleges that Chase invites consumers to sign up for Zelle by implying that it is safe, when in reality, it claims, Zelle is “rife with fraud” and consumers have no recourse when they are defrauded.

The Nationwide Class for this action is all Chase Bank customers within the US whose bank accounts with Chase Bank were debited in one or more transactions using the Chase Bank or Zelle mobile application and were not permanently credited by Chase or Zelle in full within forty-five days of a dispute by the customer or their authorized representative about the transaction(s). A New York Subclass has also been defined, for those Chase Bank customers living in New York.

Chase was one of the banks that set up the Zelle system, along with other large banks. According to the complaint, “the Bank has a huge incentive to get as many consumers as possible to sign up for and use Zelle for payments and money transfers: the more consumers it can persuade to set up an account and use Zelle, the more money the Bank saves by avoiding transaction payments to other payment networks.”

The complaint claims that Chase advertises Zelle as a “secure” service for sending money and that it does not warn consumers of the risk of fraud or that victims of fraud will not be reimbursed for their losses.

“Unlike other commonly used consumer payment systems—credit cards, debit cards, even PayPal[,]” the complaint alleges, “Zelle has no consumer fraud protections, money transfers are immediate and irrevocable, and neither Zellle nor the Bank will provide help in the case of fraud.”

When the fraud is perpetrated through fraudsters gaining access to their devices, the complaint alleges, “the Bank maintains a massive bureaucratic apparatus designed to make it impossible for victims to lodge a successful fraud claim.” According to the complaint, “the Bank denies the claim without conducting a full investigation…”

When the fraud is perpetrated through fraudsters persuading the victims to make transfer, the complaint alleges, Chase denies the claims entirely, blaming the victims.

Guidance from agencies, the complaint contends, indicates that Zelle transactions are electronic fund transfers subject to the Electronic Fund Transfer Act (EFTA), which attempts to protect consumer rights. The complaint quotes the law as “provid[ing] a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer systems” and argues that, under the law, Chase is required to provide significant assistance to customers who are victims of Zelle-related fraud.

Article Type: Lawsuit
Topic: Consumer
Tags: Breach of the Covenant of Good Faith and Fair Dealing, EFTA, Fraudulent Payments or Money Transfers, Negligence, Your Bank