Zelle, Bank of America Hit with Class Action Over Jan. 2023 ‘Service Malfunction’

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A proposed class action filed in Arizona alleges a service malfunction on January 18 caused a number of Zelle money transfers to be unexpectedly reversed, preventing some Bank of America customers from accessing money in their accounts and keeping them in the dark about their true account balances. 

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The 18-page lawsuit against Early Warning Services and Bank of America says the institutions’ “negligence and other violations of law” have caused Zelle users “financial hardship, bounced checks and charges assessed as a result, and emotional and mental distress.” 

Although the defendants advertise that Zelle, the country’s most widely used peer-to-peer money transfer service, allows for money sent to a consumer’s bank account to be available “typically within minutes,” the service has nevertheless been the subject of widespread consumer complaints from Bank of America customers who have claimed funds transfers were “unexpectedly reversed” in late January 2023, the complaint states. 

Other users have complained that funds they sent to other consumers via Zelle had been returned to them incorrectly, causing them to mistakenly believe they had more money available than they really did, the suit adds. Per the case, these customers later discovered that the transfers were reversed and again taken from their accounts, sometimes after they had already spent the money. 

According to the complaint, the alleged Zelle service malfunction kept consumers from accessing funds rightfully belonging to them and caused “immense hardship” as they were unable to pay for basic necessities like food, housing, bills, gas and medicine. Even after the funds were returned, the filing says, the harm from the issue remained as consumers, the “large majority” of whom live paycheck to paycheck, were left to deal with overdraft fees, late fees, and “extreme anxiety and stress” over satisfying their financial obligations. 

Rather than contact customers directly, the lawsuit scathes, Bank of America publicly misrepresented the Zelle service malfunction as “a mere delay” in posting transactions made from January 14 through 17. Zelle “has yet to comment” on the problem, according to the case.

“Its silence speaks volumes,” the lawsuit says. 

The complaint rounds out with the contention that any arbitration clause or class action waiver signed by affected Bank of America Zelle customers is void and unenforceable given that these consumers were “fraudulently induced into banking [with Zelle]” upon the belief that their money would be transferred properly and available to them when they needed it. Per the case, consumers would not have agreed to the terms containing the arbitration provision “had they known about the fraudulent, unlawful and unfair activity, misrepresentations, and negligence” alleged in the lawsuit. 

The case looks to cover all Zelle customers residing in the United States whose funds were affected by the service malfunction that occurred on January 18, 2023. 

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