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The Consumer Financial Protection Bureau said Friday it had filed a complaint against three of the nation’s largest banks and the operator of Zelle, the most widely used peer-to-peer payment system, for “allowing fraud” on that network. .

CFPB estimates that hundreds of thousands of customers of JPMorgan Chase, Bank of America and Wells Fargo have lost more than $870 million since Zelle launched seven years ago.

These three banks are co-owners of Zelle, along with four other major U.S. banks: Capital One, PNC Bank, Truist and US Bank.

“The country’s largest banks felt threatened by competing payment apps and rushed to shut down Zelle,” CFPB Director Rohit Chopra said in a statement. “By failing to provide adequate security, Zelle became a goldmine for fraudsters, while victims were often left to fend for themselves.”

CFPB notes that customers who filed fraud complaints were “widely denied assistance and some were directed to contact the fraudsters directly to get their money back.”

Additionally, according to the CFPB, the companies being sued did not properly investigate complaints or provide consumers with “the reimbursement required by law for fraud and error.”

The CFPB’s lawsuit, filed in the U.S. District Court for the District of Arizona, where Zelle operator Early Warning Services is based, specifically alleges, among other things, that the banks did not stop transfers when there were indications fraud and that they failed to protect their own account holders from using Zelle to commit fraud.

“Defendants’ failure resulted in millions of cell fraud complaints to (JP Morgan Chase, Bank of America, and Wells Fargo) alone, including complaints of over $290 million in fraud losses by 210,000 Bank of America and U.S. customers Over $360 million in fraud losses from 420,000 Chase customers and over $220 million in fraud losses from 280,000 Wells Fargo customers,” the complaint states.

In a press call Friday morning, an agency official said that while more than 2,200 financial institutions use Zelle, the three banks named in the lawsuit “control the vast majority of activity on Zelle.”

In response to the CFPB’s complaint, Early Warning Services criticized the move and called the lawsuit “meritless.”

“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, a Zelle spokeswoman at EWS, said in a statement.

“Zelle is a leader in the fight against fraud and scams and has industry-leading reimbursement policies that go beyond the law. “The CFPB’s misguided attacks will embolden criminals, cost consumers more fees, stifle small businesses, and make it harder for thousands of community banks and credit unions to compete,” Khodos added.

JPMorgan Chase spokesperson Patricia Wexler was similarly critical. “As a final attempt to further its political agenda, the CFPB is now overstepping its authority by holding banks accountable for criminals, including romance scammers,” Wexler said in an email. “It is an impressive demonstration of regulation through enforcement that bypasses the required rulemaking process.”

For its part, Bank of America claimed that fraud cases were rare and that 23 million of the bank’s customers used Zelle. “More than 99.95 percent of transactions across the Zelle network occur without incident. If a customer has a problem, we work with them directly,” said spokesman Bill Halldin. “We strongly disagree with the CFPB’s efforts to impose huge new costs on the 2,200 banks and credit unions that offer free Zelle service to their customers.”

Wells Fargo declined to comment.

The CFPB lawsuit was filed in one of the last remaining weeks of the Biden administration. And President-elect Donald Trump is widely expected to name a new person to lead the agency during his term. What this will mean for the Zelle lawsuit is unclear. (Chopra said in his testimony before the House Financial Services Committee earlier this month that even though he was confirmed for a five-year term, he respects that “the president can remove us at any time, on any day.”)

“Normally we would dismiss a lawsuit filed in the final weeks before an inauguration, but given the populist leanings of Trump’s coalition, this could well stand. Much will depend on who Trump chooses as CFPB director,” Jaret Seiberg, financial services policy analyst at TD Cowen Washington Research Group, said in an email.

Still, Seiberg said, banks may have a strong defense “since the fight largely revolves around authorized transactions that turn out to be fraudulent.” We can hardly imagine a court ordering banks to stop transactions that affect consumers want to carry out.”