The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Zelle and three banks that own it Wells Fargo, Bank of America, and JPMorgan Chase claiming they failed to protect consumers from widespread fraud. Zelle is a payment network designed to compete with payment platforms like Venmo and Cash App, but the CFPB says the banks rushed it to market, enabling fraud thats cost consumers more than $870 million since it launched in 2017.The lawsuit cites Zelles designs and features, including a limited identity verification process that involves assigning a token to a users email address or mobile phone number that they can use to verify their account with a one-time passcode. This setup makes it easier for scammers to take over accounts, as well as hide their own identities or pretend to be other institutions, the CFPB alleges.Some of the problems the CFPB cites in Zelles design. CFPB complaintOne of the most common Zelle scams involves bad actors impersonating a financial institution or a federal agency, who then trick customers into sending them money. After facing pressure from the CFPB, the banks backing Zelle started issuing refunds to victims of this type of scam last year. This latest lawsuit follows other CFPB actions to tighten regulation around digital wallet apps and payment networks.RelatedThe CFPB accuses Zelle and the banking trio of failing to track and quickly stop criminals on the platform, as they allegedly didnt relay information about known fraudulent transactions with other institutions in the payment network. It also alleges Bank of America, JPMorgan Chase, and Wells Fargo didnt properly address the risk of fraud despite the hundreds of thousands of complaints they received.Zelle pushed back on the lawsuit in a statement published on Friday. The CFPBs attacks on Zelle are legally and factually flawed, and the timing of this lawsuit appears to be driven by political factors unrelated to Zelle, Zelle spokesperson Jane Khodos said. The CFPBs 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.The CFPB is asking the court to stop Zelles parent company, Early Warning Services, and the banks from violating consumer protection laws, and compensate users, among other penalties.