Class-Action Lawsuit Dropped Against Wells Fargo, Zelle

Payments, fintech, Zelle, earnings

A class-action lawsuit launched against banking giant Wells Fargo and digital payments network Zelle was dropped, Law360 reported.

Seattle resident Luke Hartsock claimed he was scammed out of $7,500 and filed a lawsuit against Wells Fargo and Zelle on June 1 for allegedly failing to protect customers. On Tuesday (June 28) Hartsock filed a notice of voluntary dismissal without prejudice in Washington federal court. No reasons were given, and the plaintiff’s counsel couldn’t be reached for comment, Law360 reported.

See also: Wells Fargo Facing Class-Action Lawsuit Over Alleged Zelle Scams

Zelle is a product of Early Warning Services, LLC, a FinTech owned by Wells Fargo and six of the other biggest U.S. banks — Bank of America, BB&T (now Truist), Capital One, JPMorgan Chase, PNC Bank and U.S. Bank.

Hartsock accused Wells Fargo and Early Warning Services of neglecting to take action to protect customers because of the costs to do so, according to the report. The complaint indicated that banks were aware that Zelle was the center of fraud and had been vulnerable to fraudsters.

Read more: Report: Banks Resist Refunds for Unauthorized Zelle Payments

“The immediacy of Zelle’s service has made it a favorite primarily among consumers, but that has made it a favorite among criminals, who can access bank accounts directly,” the complaint said, 360Law reported. 

“Once scammers can scare or trick their victims into sending money via Zelle, they can siphon away thousands of dollars in seconds,” according to the complaint.

Hartsock was eventually credited $3,500 from Wells Fargo but not for the additional $4,000.

The suit pointed to multiple counts of negligence and violations of the Electronic Fund Transfer Act and the Washington Consumer Protection Act, according to the report. Hartsock sought to be appointed as class representative in the lawsuit and to have his attorneys appointed class counsel.

Related: Zelle, Fiserv Partnership Now Working With 1K Banks, Credit Unions

The suit followed additional legal actions levied against other banks and lenders, including Bank of America, the target of a May lawsuit that accused the bank of failing to tell customers they have slim chances of recovering losses if they are targets of fraud through Zelle and Venmo, per Law360.