On Friday, the Consumer Financial Protection Bureau (CFPB) sued four financial companies involved with Zelle. The CFPB’s lawsuit (via CNBC) accuses Zelle’s operator (Early Warning Services) and three of the service’s partner banks — JPMorgan Chase, Bank Of America and Wells Fargo — of failing to protect consumers from widespread fraud on the peer-to-peer payment system.

The CFPB says customers of those three banks have lost over $870 million during Zelle’s seven years as a payment service. The suit claims hundreds of thousands of customers who filed fraud complaints were denied meaningful assistance, with some being told to “contact the fraudsters directly to recover their money.” (Pro tip: Don’t do that.)

“The nation’s largest banks felt threatened by competing payment apps, so they rushed to put out Zelle,” CFPB Director Rohit Chopra wrote in a statement. “By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves.”

The CFPB says one of the system’s loopholes is that its “tokens” (linked US phone numbers or email addresses) can be used and reassigned across different banks. The agency claims fraudsters can exploit this by connecting a victim’s number or email to the perpetrator’s deposit account, causing payments meant for the consumer to go to the scammer’s account instead.

The suit accuses Zelle and the banks of allowing repeat offenders to bounce between financial institutions with impunity. “Banks did not share information about known fraudulent transactions with other banks on the network,” the CFPB wrote. “As a result, bad actors could carry out repeated fraud schemes across multiple institutions before being detected, if they were detected at all.”

The CFPB also claims the defendant banks didn’t heed red flags to prevent further fraud, report incidents consistently or on time, properly investigate customer complaints or take appropriate action.

On Friday, Zelle framed the government’s lawsuit as a political hit that would help criminals and force them to charge fees. “The CFPB’s attacks on Zelle are legally and factually flawed, and the timing of this lawsuit appears to be driven by political factors unrelated to Zelle,” Jane Khodos, Zelle spokesperson, wrote in a statement. “Zelle leads the fight against scams and fraud and has industry-leading reimbursement policies that go above and beyond the law. The CFPB’s misguided attacks will embolden criminals, cost consumers more in fees, stifle small businesses and make it harder for thousands of community banks and credit unions to compete.”

In September, JPMorgan Chase wrote in a quarterly filing (via CNBC) that it would consider counter-litigation if the CFPB took action against the bank for its role with Zelle.

Last month, The Washington Post reported that President-elect Donald Trump and Congressional Republicans plan to limit the CFPB’s funding and powers, aligning with the agendas of large financial institutions. Elon Musk and Vivek Ramaswamy, his “government efficiency” advisors, have said they want to eliminate the agency, which was established in 2011 in response to the 2007-08 financial crisis and resulting recession.

Killing the agency would require a congressional vote that wouldn’t likely pass, given Republicans’ thin majorities. But they could do what Trump did in his first term: appoint a new director to slow or stop regulatory actions, effectively kneecapping the agency as long as they’re in charge.

This article originally appeared on Engadget at https://www.engadget.com/cybersecurity/the-us-consumer-financial-protection-bureau-sues-zelle-and-four-of-its-partner-banks-175714692.html?src=rss

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The Federal Trade Commission (FTC) has seen an alarming rise in gamified job scams over the past year. The FTC says that reports of job scams have quadrupled each year since 2022 topping out at 20,000 reports at a cost of $41 million in total during the first six months of the year.

Job or task scams often involve the scammer asking someone to do a relatively simple task online such as liking videos or rating product images in assigned sets using terms like “product boosting” or “app optimization,” according to the FTC. People are promised higher payments for completing a certain amount of sets that may pay out small amounts at first but they end up costing more than they pay out in the long run.

Scammers will reach out to people via text messages or communication apps like Whatsapp offering them a task job. The most common type of this scam usually involves some kind of cryptocurrency. Then the scammer may ask their target to deposit some money or “charge up” their account through an app in order to start working on new and bigger sets of tasks. They may even try to convince their victims by hearing testimonials from fake recipients about how much money they made for completing relatively simple tasks.

The victim will “charge up” their accounts with their own money in order to avoid losing what the app shows they’ve earned in the hopes they’ll get their deposited money and the fee they are owed. Instead, the money they’ve been paid isn’t real and any money they’ve deposited to “charge up” their account is lost for good.

The FTC recommends ignoring offers from unknown text or WhatsApp messages and never paying someone for the promise of being paid at a later time or date. The commission also recommends steering clear of any job offers that involve rating or liking things online, a practice the FTC says is “illegal and no honest company will do it.”

This article originally appeared on Engadget at https://www.engadget.com/cybersecurity/the-ftc-warns-gamified-job-scams-are-on-the-rise-233029615.html?src=rss

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