The Consumer Financial Protection Bureau sued three of the nation's largest banks and the operator of Zelle last week, alleging a failure to protect consumers from widespread fraud on the peer-to-peer payment network, resulting in customer losses of more than $870 million since 2017. 

The Details: The CFPB's lawsuit alleges that JP Morgan Chase & Co. (NYSE:JPM), Wells Fargo & Co. (NYSE:WFC), Bank of America Corp. (NYSE:BAC) and Early Warning Services rushed to complete the Zelle payment network in order to compete with Venmo and CashApp and neglected to enact effective fraud safeguards.

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"The nation's largest banks felt threatened by competing payment apps, so they rushed to put out Zelle," said CFPB Director Rohit Chopra. "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 lawsuit further alleges that the banks "systemically failed" their customers by failing to properly investigate customer complaints or share information on known acts of fraud which allowed bad actors to hop between banks and commit repeated fraudulent transactions. 

Benzinga contacted JPMorgan, Wells Fargo, Bank of America and Early Warning Services for comment on the lawsuit.

In a statement given to CBS News, a Zelle spokesperson said the CFPB’s accusations are “legally and factually flawed” and the lawsuit is “driven by political factors." 

JPMorgan also told CBS News that the CFPB has a “political agenda,”and the agency is “overreaching its authority by making banks accountable for criminals, even including romance scammers.”

The CFPB said its lawsuit aims to stop the banks' alleged unlawful practices, secure penalties for the violations and obtain other relief for consumers. 

"The banks failed to fix glaring flaws in their systems even as hundreds of thousands of customers filed complaints about fraud," Chopra said in a statement.

"The banks knew their customers were having their money stolen, but since they weren't bearing the cost of these losses themselves, they dragged their feet on fixing the problems," he added. 

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