News Summary
New York State Attorney General Letitia James has filed a lawsuit against Early Warning Services, the operator of Zelle, citing insufficient security measures that enabled over $1 billion in fraud from 2017 to 2023. The suit points to significant vulnerabilities within Zelle’s platform which have made it easy for scammers to exploit unsuspecting users. James is seeking restitution for affected New Yorkers and urging Zelle to improve its anti-fraud protections as concerns grow over banking security within online payment systems.
New York City – The New York State Attorney General, Letitia James, has initiated a lawsuit against Early Warning Services (EWS), the operator of the payment platform Zelle. The legal action stems from allegations that EWS has inadequately protected users, allowing over $1 billion to be stolen through fraud between 2017 and 2023.
The lawsuit claims that an investigation conducted by James’ office revealed serious deficiencies in Zelle’s security measures. It was found that the payment platform was designed without essential safety features that would shield users from potential fraud. This lack of safeguards has not only put customers at risk but has reportedly contributed to the ease with which scammers can exploit the platform.
EWS is owned by some of the largest banks in the United States, including JPMorgan Chase, Bank of America, Capital One, and Wells Fargo. According to the attorney general, these institutions have been aware of the vulnerabilities within Zelle for several years, yet they failed to implement adequate anti-fraud measures to protect users from scams.
As part of the lawsuit, James is seeking restitution for New Yorkers who have been affected by the fraudulent activity and is requesting a court order to compel Zelle to enhance its anti-fraud protections. The complaint highlights specific vulnerabilities within the platform’s registration process, which allegedly lacks sufficient verification steps. This has allowed scammers to easily register and impersonate legitimate businesses and government entities.
A notable instance included in the lawsuit involved a New York user who was deceived into sending almost $1,500 to a fraudulent account that was pretending to be Con Edison. Such cases illustrate the dire consequences of the platform’s shortcomings. The lawsuit further alleges that EWS received numerous complaints about fraud but did not take adequate steps to remove scammers from Zelle or provide reimbursement to victims.
Notably, Zelle’s system operates under an irreversible transfer model, complicating the recovery process for users who fall victim to scams. As a result, those affected often find themselves without recourse to recover lost funds. The lawsuit asserts that EWS only began to adopt basic network safeguards in 2023, well after the fraud epidemic began.
The Consumer Financial Protection Bureau (CFPB) had previously dropped a lawsuit against EWS and several banks in March 2025, raising questions about the regulatory environment surrounding online payment platforms. Earlier actions by the CFPB accused EWS and major banks of neglecting consumer complaints related to Zelle and failing to reimburse victims of scams.
In the wake of decreasing federal enforcement actions, the lawsuit signals a broader trend of state attorneys general becoming more proactive in consumer protection efforts. James’ office aims to address the apparent inaction of federal authorities regarding financial fraud and consumer safety.
In response to the lawsuit, Zelle has dismissed the allegations, labeling the action as a “political stunt.” The company claims that over 99.95% of its transactions are completed without any reports of scams or fraud. However, the reality reflected in the lawsuit paints a different picture of the platform’s reliability and user safety.
This legal action could potentially shift the landscape of online payment systems and compel financial institutions to examine their fraud prevention strategies more rigorously. As the case progresses, it remains to be seen what impact it will have on both consumers and the broader financial industry.
Deeper Dive: News & Info About This Topic
HERE Resources
New York AG Sues Zelle’s Parent Company Over Fraud Protection
Zelle Shuts Down Stand-Alone App: What You Need to Know
Additional Resources
- CNBC
- Google Search: Zelle lawsuit New York Attorney General
- Reuters
- Wikipedia: Zelle
- CBS News
- Encyclopedia Britannica: Digital Payment
- AML Intelligence
- Google Scholar: Zelle fraud lawsuit
- Payments Dive
- Google News: Zelle fraud lawsuit
Author: STAFF HERE NEW YORK WRITER
NEW YORK STAFF WRITER The NEW YORK STAFF WRITER represents the experienced team at HERENewYork.com, your go-to source for actionable local news and information in New York, the five boroughs, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as New York Fashion Week, Macy's Thanksgiving Day Parade, and Tribeca Film Festival. Our coverage extends to key organizations like the Greater New York Chamber of Commerce and United Way of New York, plus leading businesses in finance and media that power the local economy such as JPMorgan Chase, Goldman Sachs, and Bloomberg. As part of the broader HERE network, including HEREBuffalo.com, we provide comprehensive, credible insights into New York's dynamic landscape.
