(Credit: Tierney L. Cross/Bloomberg via Getty Images)
The Consumer Financial Protection Bureau has dropped its lawsuit against Early Warning Services, the company that runs peer-to-peer payment platform Zelle, CNBC reports.
The lawsuit was brought in December, after the CFPB found that Zelle had failed to implement effective safeguards against fraudulent activities, resulting in a combined loss of more than $870 million for customers of Bank of America, JPMorgan Chase, and Wells Fargo. These three banks are among the seven that co-own Zelle's parent company.
The lawsuit also claimed that Zelle had "largely denied assistance" to its affected customers and failed to provide them with "legally required reimbursement." The CFPB demanded an end to these unlawful practices, along with monetary relief for the victims and other remedies.
However, in its Tuesday filing, the independent US agency reversed its course and dismissed the case "with prejudice." That means customers won't be able to claim reliefs, and the agency won't be able to press the same charges again, former head of enforcement Eric Halperin tells CNBC.
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The development comes at a time the consumer finance watchdog is fighting to stay afloat. Last month, Elon Musk, who heads the Department of Government Efficiency (DOGE), posted "CFPB RIP" and said that "they did above zero good things." However, as of Jan. 30, 2025, the agency had paid out $19.7 billion in consumer relief and imposed $5 billion in civil money penalties.
A few days later, the National Treasury Employees Union, which represents over 1,000 employees at CFPB, filed a lawsuit claiming that the Trump administration had unlawfully ordered the agency to stop working. According to The Verge, some employees submitted statements to a judge saying Trump was trying to fire a vast majority of workers so that CFPB would exist in name only.
Since its inception, DOGE has ordered the scale back or dismantling of nearly 15 federal units, the most recent being 18F, which developed IT services like Login.gov and oversaw the central login system for government services like Medicare, Medicaid, and Social Security.