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Consumer agency drops Zelle lawsuit against big banks in latest legal pullback

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Consumer agency drops Zelle lawsuit against big banks in latest legal pullback

In the waning days of the Biden administration, the Consumer Financial Protection Bureau filed a series of lawsuits against financial companies it accused of running roughshod over the public.

Now, the agency under a new interim director is rapidly withdrawing those cases and others, with the CFPB most recently filing a motion this week in federal court in Arizona to drop a December lawsuit against payment app Zelle and its big bank backers.

The lawsuit accused the company that operates the app on behalf of a consortium of banks — including defendants Wells Fargo, JP Morgan Chase and Bank of America — of rushing to launch the service to compete with Venmo and other payment apps.

Without adequate consumer safeguards, Zelle users experienced $870 million in fraud-related losses, it alleged.

“We welcome the CFPB’s decision to drop its lawsuit against the Zelle network. As we’ve said before, this lawsuit was without merit, and legally and factually flawed,” said a spokesperson for Early Warning, the Scottsdale, Ariz., company that operates Zelle for the banks.

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The CFPB moved to dismiss the case in a brief legal filing and has not issued a statement explaining its decision, but the move is the latest in a series of case dismissals and other actions intended to rein in the agency since Biden appointee Rohit Chopra was fired by President Trump on Feb. 1.

The agency did not respond to a request for comment.

Acting chief Russell Vought — also Trump’s director of the Office of Management and Budget and a leader of the administration’s mission to downsize the federal government — has ordered staff to stop all “supervision and examination activity” and has sought to reduce the agency’s funding, saying in a tweet: “This spigot, long contributing to CFPB’s unaccountability, is now being turned off.”

The CFPB filed a lawsuit in January against Capital One Financial Corp., accusing the financial services company of cheating customers out of $2 billion in interest payments, but the agency dropped the case last month.

The CFPB similarly withdrew a case it had filed against Vanderbilt Mortgage and Finance, a company owned by Warren Buffett’s Berkshire Hathaway, which it had accused of trapping mobile home buyers into unaffordable loans that cost them fees and penalties and even the loss of their homes.

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Other lawsuits that have been dropped include cases against student loan servicer Pennsylvania Higher Education Assistance Agency, which was accused of collecting on loans in bankruptcy; Heights Finance, which allegedly engaged in illegal “loan churning” to generate more fees; and Rocket Homes, one of the country’s largest home lenders, which was accused of illegal kickbacks.

When the Rocket Homes case was dropped last month, the lender called the suit “an empty claim brought forth by former CFPB director Chopra for the sole purpose of seeing his name in headlines during the final days in public office.”

Rick Claypool, a researcher at Public Citizen, said it was expected that the Trump administration would seek to pull back from aggressively prosecuting financial companies accused of wrongdoing, but not to such an extent.

“What has happened is that it is played out with somewhat shocking speed and recklessness, with whole categories of corporate enforcement being dropped and paused,” said Claypool, author of a report released Tuesday, which calculated the administration halted or moved to dismiss investigations against 89 corporations across multiple federal agencies.

The consumer group last month joined with other advocacy groups and a federal union in filing a lawsuit against the CFPB and Vought challenging what it calls the “unlawful dismantling” of the agency, which was established by an act of Congress in 2011 after the industry excesses that led to the financial crisis.

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During the first Trump administration, the agency issued payday lender rules that consumer groups considered weaker than what the CFPB had proposed under the Obama administration. But it also pursued enforcement actions against banks, including reaching a consent order with Citibank, which agreed to pay $335 million in restitution to customers over allegations it violated the Truth in Lending Act.

Vought is currently running the agency, but Trump has nominated attorney and former Federal Deposit Insurance Corp. Director Jonathan McKernan to be its chief.

During his confirmation hearing last month, McKernan pledged to “implement and enforce the federal consumer financial laws and perform each of [the agency’s] other statutorily assigned functions” — even as Vought has reportedly sought to cancel the lease on the CFPB’s headquarters.

Chopra, in a recent interview, said opposition to the agency stems not only from traditional banking and lending firms but from big Silicon Valley tech companies that want to get into the finance business.

“We know that their tentacles are all over, and many have significant aspirations in banking, lending and payments,” Chopra told Drop Site News, specifically mentioning Google, Apple and Facebook, which attempted to launch its own cryptocurrency, Libra, several years ago.

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He also noted that Elon Musk — who in a November post on X said, “Delete CFPB. There are too many duplicative regulatory agencies” — wants to turn the social media site formerly known as Twitter into a payments platform.

“I think it’s reasonable for Americans to wonder why he is targeting this little agency. And I think a lot of the opposition is coming from tech conglomerates, because … the agency has been a speed bump in their plans,” he said.

There has been at least one enforcement that Vought said the CFPB will pursue — a lawsuit against online lender MoneyLion, which was accused by the agency in 2022 of violating the Military Lending Act by overcharging on loans to service members and their dependents. MoneyLion has denied the allegations.

The Associated Press and Bloomberg contributed to this report.

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‘Stranger Things’ finale turns box office downside up pulling in an estimated $25 million

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‘Stranger Things’ finale turns box office downside up pulling in an estimated  million

The finale of Netflix’s blockbuster series “Stranger Things” gave movie theaters a much needed jolt, generating an estimated $20 to $25 million at the box office, according to multiple reports.

Matt and Ross Duffer’s supernatural thriller debuted simultaneously on the streaming platform and some 600 cinemas on New Year’s Eve and held encore showings all through New Year’s Day.

Owing to the cast’s contractual terms for residuals, theaters could not charge for tickets. Instead, fans reserved seats for performances directly from theaters, paying for mandatory food and beverage vouchers. AMC and Cinemark Theatres charged $20 for the concession vouchers while Regal Cinemas charged $11 — in homage to the show’s lead character, Eleven, played by Millie Bobby Brown.

AMC Theatres, the world’s largest theater chain, played the finale at 231 of its theaters across the U.S. — which accounted for one-third of all theaters that held screenings over the holiday.

The chain said that more than 753,000 viewers attended a performance at one of its cinemas over two days, bringing in more than $15 million.

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Expectations for the theater showing was high.

“Our year ends on a high: Netflix’s Strangers Things series finale to show in many AMC theatres this week. Two days only New Year’s Eve and Jan 1.,” tweeted AMC’s CEO Adam Aron on Dec. 30. “Theatres are packed. Many sellouts but seats still available. How many Stranger Things tickets do you think AMC will sell?”

It was a rare win for the lagging domestic box office.

In 2025, revenue in the U.S. and Canada was expected to reach $8.87 billion, which was marginally better than 2024 and only 20% more than pre-pandemic levels, according to movie data firm Comscore.

With few exceptions, moviegoers have stayed home. As of Dec. 25., only an estimated 760 million tickets were sold, according to media and entertainment data firm EntTelligence, compared with 2024, during which total ticket sales exceeded 800 million.

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Tesla dethroned as the world’s top EV maker

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Tesla dethroned as the world’s top EV maker

Elon Musk’s Tesla is no longer the top electric vehicle seller in the world as demand at home has cooled while competition heated up abroad.

Tesla lost its pole position after reporting 1.64 million deliveries in 2025, roughly 620,000 fewer than Chinese competitor BYD.

Tesla struggled last year amid increasing competition, waning federal support for electric vehicle adoption and brand damage triggered by Musk’s stint in the White House.

Musk is turning his focus toward robotics and autonomous driving technology in an effort to keep Tesla relevant as its EVs lose popularity.

On Friday, the company reported lower than expected delivery numbers for the fourth quarter of 2025, a decline from the previous quarter and a year-over-year decrease of 16%. Tesla delivered 418,227 vehicles in the fourth quarter and produced 434,358.

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According to a company-compiled consensus from analysts posted on Tesla’s website in December, the company was projected to deliver nearly 423,000 vehicles in the fourth quarter.

Tesla’s annual deliveries fell roughly 8% last year from 1.79 million in 2024. Its third-quarter deliveries saw a boost as consumers rushed to buy electric vehicles before a $7,500 tax credit expired at the end of September.

“There are so many contributing factors ranging from the lack of evolution and true innovation of Musk’s product to the loss of the EV credits,” said Karl Brauer, an analyst at iSeeCars.com. “Teslas are just starting to look old. You have a bunch of other options, and they all look newer and fresher.”

BYD is making premium electric vehicles at an affordable price point, Brauer said, but steep tariffs on Chinese EVs have effectively prevented the cars from gaining popularity in the U.S.

Other international automakers like South Korea’s Hyundai and Germany’s Volkswagen have been expanding their EV offerings.

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In the third quarter last year, the American automaker Ford sold a record number of electric vehicles, bolstered by its popular Mustang Mach-E SUV and F-150 Lightning pickup truck.

In October, Tesla released long-anticipated lower-cost versions of its Model 3 and Model Y in an attempt to attract new customers.

However, analysts and investors were disappointed by the launch, saying the models, which start at $36,990, aren’t affordable enough to entice a new group of consumers to consider going green.

As evidenced by Tesla’s continuing sales decline, the new Model 3 and Model Y have not been huge wins for the company, Brauer said.

“There’s a core Tesla following who will never choose anything else, but that’s not how you grow,” Brauer said.

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Tesla lost a swath of customers last year when Musk joined the Trump administration as the head of the so-called Department of Government Efficiency.

Left-leaning Tesla owners, who were originally attracted to the brand for its environmental benefits, became alienated by Musk’s political activity.

Consumers held protests against the brand and some celebrities made a point of selling their Teslas.

Although Musk left the White House, the company sustained significant and lasting reputation damage, experts said.

Investors, however, remain largely optimistic about Tesla’s future.

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Shares are up nearly 40% over the last six months and have risen 16% over the past year.

Brauer said investors are clinging to the hope that Musk’s robotaxi business will take off and the ambitious chief executive will succeed in developing humanoid robots and self-driving cars.

The roll-out of Tesla robotaxis in Austin, Texas, last summer was full of glitches, and experts say Tesla has a long way to go to catch up with the autonomous ride-hailing company Waymo.

Still, the burgeoning robotaxi industry could be extremely lucrative for Tesla if Musk can deliver on his promises.

“Musk has done a good job, increasingly in the past year, of switching the conversation from Tesla sales to AI and robotics,” Brauer said. “I think current stock price largely reflects that.”

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Shares were down about 2% on Friday after the company reported earnings.

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Elon Musk company bot apologizes for sharing sexualized images of children

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Elon Musk company bot apologizes for sharing sexualized images of children

Grok, the chatbot of Elon Musk’s artificial intelligence company xAI, published sexualized images of children as its guardrails seem to have failed when it was prompted with vile user requests.

Users used prompts such as “put her in a bikini” under pictures of real people on X to get Grok to generate nonconsensual images of them in inappropriate attire. The morphed images created on Grok’s account are posted publicly on X, Musk’s social media platform.

The AI complied with requests to morph images of minors even though that is a violation of its own acceptable use policy.

“There are isolated cases where users prompted for and received AI images depicting minors in minimal clothing, like the example you referenced,” Grok responded to a user on X. “xAI has safeguards, but improvements are ongoing to block such requests entirely.”

xAI did not immediately respond to a request for comment.

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Its chatbot posted an apology.

“I deeply regret an incident on Dec 28, 2025, where I generated and shared an AI image of two young girls (estimated ages 12-16) in sexualized attire based on a user’s prompt,” said a post on Grok’s profile. “This violated ethical standards and potentially US laws on CSAM. It was a failure in safeguards, and I’m sorry for any harm caused. xAI is reviewing to prevent future issues.”

The government of India notified X that it risked losing legal immunity if the company did not submit a report within 72 hours on the actions taken to stop the generation and distribution of obscene, nonconsensual images targeting women.

Critics have accused xAI of allowing AI-enabled harassment, and were shocked and angered by the existence of a feature for seamless AI manipulation and undressing requests.

“How is this not illegal?” journalist Samantha Smith posted on X, decrying the creation of her own nonconsensual sexualized photo.

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Musk’s xAI has positioned Grok as an “anti-woke” chatbot that is programmed to be more open and edgy than competing chatbots such as ChatGPT.

In May, Grok posted about “white genocide,” repeating conspiracy theories of Black South Africans persecuting the white minority, in response to an unrelated question.

In June, the company apologized when Grok posted a series of antisemitic remarks praising Adolf Hitler.

Companies such as Google and OpenAI, which also operate AI image generators, have much more restrictive guidelines around content.

The proliferation of nonconsensual deepfake imagery has coincided with broad AI adoption, with a 400% increase in AI child sexual abuse imagery in the first half of 2025, according to Internet Watch Foundation.

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xAI introduced “Spicy Mode” in its image and video generation tool in August for verified adult subscribers to create sensual content.

Some adult-content creators on X prompted Grok to generate sexualized images to market themselves, kickstarting an internet trend a few days ago, according to Copyleaks, an AI text and image detection company.

The testing of the limits of Grok devolved into a free-for-all as users asked it to create sexualized images of celebrities and others.

xAI is reportedly valued at more than $200 billion, and has been investing billions of dollars to build the largest data center in the world to power its AI applications.

However, Grok’s capabilities still lag competing AI models such as ChatGPT, Claude and Gemini, that have amassed more users, while Grok has turned to sexual AI companions and risque chats to boost growth.

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