Bye, bye federal checks

The federal government wants to start phasing out paper checks beginning Sept. 30, 2025. This is according to an executive order signed by President Trump on March 25. Not surprisingly, the feds have received plenty of recommendations for how to accomplish this feat. Among them: the person-to-person payment network Zelle.

A letter authored by Early Warning Services, the operator of Zelle, stated that the network is "uniquely positioned to help Treasury meet its goals." EWS is owned by many of the largest banks in the country, including JPMorgan Chase, Bank of America and Wells Fargo. It also serves non-owner financial institution (FIs) members that enable it to reach 95 percent of demand deposit accounts in the country.

As a result, Zelle is embedded in more than 2,200 FIs representing over 82 percent of demand deposit accounts, EWS claimed. Last year alone, Zelle facilitated more than $1 trillion in payments involving 3.6 billion transactions, EWS said.

Not so fast

But there is a problem: Zelle allegedly has become a favored payment network of fraudsters and scam artists. Zelle and three of the largest banks on the network—Bank of America, JPMorgan Chase and Wells Fargo—were sued by the Consumer Financial Protection Bureau Dec. 20, 2024, for allowing fraudsters and scammers to use the network unabated.

According to the complaint, hundreds of thousands of Zelle customers filed complaints with the banks to receive help tracking down fraudsters and recouping their money, but the banks failed to investigate, and often denied reimbursements as required by federal Regulation E (which covers consumer electronic fund transfers). In fact, some consumers said they were told to contact the scammers for redress.

The consumer watchdog agency also faulted Zelle and the three banks for "shoddy safeguards" and faulty design that made fraud and scams easy to commit.

The CFPB dropped the lawsuit on March 4, 2025. Other lawsuits filed during the Biden Administration were also dropped this year. And JPMorgan Chase has taken steps to block transactions originating from social media sites, in an effort to thwart scammers.

Lawmakers home in on fraud

On July 3, 2025, Rep. Maxine Waters, ranking member of the House Financial Services Committee, along with Sen. Elizabeth Warren, ranking member of the Senate Banking Committee, and Sen. Richard Blumenthal, ranking member of the Senate Permanent Subcommittee on Investigations, sent letters to the following banks that own Zelle: Wells, U.S. Bank, PNC, Bank of America and Capital One. The lawmakers demanded detailed information on what actions the banks are taking to detect and halt the surge in social-media-related scams exploiting the network for profit. They pointed to Chase's decision to block transactions originating from social media sites, as proof that the network is a bastion of scammers.

In addition, the lawmakers requested detailed answers to questions like the percentage of scams reported to them as originating from social media platforms, copies of policies and procedures regarding consumer reimbursements when frauds are reported, and additional steps each bank is taking to protect consumers. Answers were requested by July 24.

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