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Last week, Zelle operator Early Warning Services (EWS) wrote to the US Treasury Department in response to its Request for Information on the replacement of government checks with electronic funds transfer (EFT) methods.
As per Executive Order (EO) 14249, issued in March this year, the Trump administration aims to cease issuing checks for all federal disbursements by September 30, 2025.
In its response, EWS pitched Zelle as a “safe”, “trusted” and “ready-to-deploy” solution to the administration’s digitisation plans.
“Through disbursements via Zelle, funds can be delivered in minutes to an enrolled recipient’s verified bank account using only an email address or phone number,” said Denise Leonhard, general manager of Zelle.
“This eliminates the need to collect or store sensitive account information and routing numbers.”
EWS also expressed support for a “bank-led” approach, noting that Zelle is embedded in more than 2,200 financial institutions covering over 82 percent of direct deposit accounts (DDAs).
It added that it is currently partnering with the Bureau of Fiscal Services (BFS) to screen disbursements using its Verify Account solution.
EWS said that in March 2025, for example, it verified the account data of more than 89m payments, helping to prevent $129m in child tax credit fraud and $80.5m in fraudulent disbursements from the Federal Emergency Management Agency (FEMA).
Support from payments associations
EWS’s pitch has found support from the Bank Policy Institute (BPI), The Clearing House (TCH) and the Consumer Bankers Association (CBA), which last week sent a joint letter to Treasury recommending the use of Zelle for disbursements.
However, they also recommended that Treasury consider using TCH’s Automated Clearing House (ACH), its Real Time Payments (RTP) platform and “other modern payment solutions which are both secure and user-friendly”.
Finally, the three signatories urged Treasury to ensure that its chosen payment services are subject to “consistent regulatory obligations”.
“This is particularly important with respect to securing payments and enforcing consumer protections,” they said.
Democrats still not satisfied with Zelle’s scam-fighting record
Even as Zelle is pitching for work from the US government, Democrat lawmakers continue to pressure EWS and Zelle’s owner banks to respond to longstanding allegations that they have failed to protect users from scams.
Last week, Senator Elizabeth Warren (D-MA), Senator Richard Blumenthal (D-CT) and Representative Maxine Waters (D-CA) wrote to seven of Zelle’s owner banks to request further information on their latest fraud prevention measures.
The three lawmakers wrote identical letters to six of the banks and a separate letter to J.P. Morgan Chase, in recognition that the latter has taken some recent action on scams.
In February 2025, J.P. Morgan Chase announced that it would no longer allow customers to send Zelle payments that are identified as originating from social media contact.
This policy was introduced in response to internal data which showed that, in H2 2024, almost 50 percent of scams reported via the bank’s complaints channels had originated on social media.
All seven banks were asked to provide data from the past five years showing what percentage of Zelle scams and fraud originated on social media, and what percentage of all P2P scams and fraud originated on social media.
They were also asked to describe what further steps they have taken, if any, to protect Zelle users from scams, and to explain why users who fall victim to scams typically cannot be reimbursed.
The banks were given until July 16, 2025 to respond.
Bill to reimburse scam victims fails to gain traction
The lawmakers added that the letters build on their Congressional work on P2P scams, including the introduction of the Protecting Consumers from Payment Scams Act.
The key provision of the bill is that it would amend the Electronic Fund Transfer Act (EFTA) so that consumers are entitled to be reimbursed for authorised fraud, rather than restricting statutory reimbursement to unauthorised fraud.
Introduced in August last year, the bill was read twice and referred to the Senate Banking Committee; no further actions have been taken since.
In their letter to the seven banks, the trio noted that under President Biden the Consumer Financial Protection Bureau (CFPB) had finalised a rulemaking that would have subjected large P2P apps to supervision for their compliance with federal consumer financial protection laws.
This would have resulted in proactive reforms across the sector, they said, rather than relying on enforcement activity against individual violations of those laws after the fact.
They added that Zelle’s owner banks are members of associations that were “generally supportive” of that rulemaking.
“However, Congressional Republicans vacated the CFPB rulemaking,” they wrote. “And in May, President Trump signed into law the measure overturning the rule, again leaving consumers to fend for themselves against widespread fraud and scams on P2P platforms.”
Zelle’s star rises following Trump administration reprieve
The possibility that Zelle will provide EFT services to the Treasury Department marks a stark contrast with its treatment under the previous administration.
In December 2024, in one of its final moves of the Biden presidency, the CFPB filed a lawsuit against Zelle and its three largest owner banks, J.P. Morgan Chase, Bank of America (BofA) and Wells Fargo.
The suit alleged that the defendants had failed to implement “adequate” fraud prevention measures and had “systematically” denied relief to victims, leading to more than $870m in consumer losses.
In March this year, the lawsuit was voluntarily dismissed by the Trump CFPB “with prejudice”, meaning that the agency cannot file another lawsuit based on the same claims.
As covered by Vixio, the Zelle lawsuit was one of the most significant cases to be dropped by the CFPB under the leadership of acting director and Trump appointee Russell Vought.
With the case now closed, Democrat lawmakers are hoping to use Congressional powers to encourage, if not force, fraud prevention reforms across the Zelle network.
