New York Attorney General Letitia James has filed a lawsuit against Early Warning Services (EWS), the operator of the Zelle payment network, alleging the platform enabled scammers to steal more than $1 billion from users between 2017 and 2023.
According to the Attorney General’s office, the investigation found that Zelle was designed “without critical safety features,” making it particularly vulnerable to fraud. The lawsuit claims that EWS and its partner banks failed to adopt essential safeguards or enforce meaningful anti-fraud policies, despite being aware of the risks.
“EWS knew from the beginning that key features of the Zelle network made it uniquely susceptible to fraud, and yet it failed to take basic steps to protect consumers,” James’ office said. The complaint alleges that the registration process lacked proper verification and that the company ignored warnings about the growing scale of fraudulent activity for years.
James is seeking restitution for affected consumers, damages, and a court order requiring Zelle to implement stronger anti-fraud protections. “No one should be left to fend for themselves after falling victim to a scam,” James said. “I look forward to getting justice for the New Yorkers who suffered because of Zelle’s security failures.”
In response, a Zelle spokesperson rejected the allegations, calling the lawsuit a “political stunt” and a “copycat” of a similar case previously brought by the Consumer Financial Protection Bureau (CFPB). “Had they conducted an investigation, they would have learned that more than 99.95% of all Zelle transactions are completed without any report of scam or fraud — which leads the industry,” the spokesperson said.
The lawsuit follows heightened scrutiny of peer-to-peer payment services, which have faced criticism for insufficient fraud prevention measures. In December, the CFPB sued EWS along with JPMorgan Chase, Bank of America, and Wells Fargo — the three largest U.S. banks on the Zelle network — accusing them of failing to properly investigate fraud claims or reimburse victims.
However, the CFPB later dropped its case as part of a broader wave of dismissals under acting Director Russell Vought. James’ lawsuit seeks to revive accountability efforts, arguing that Zelle’s business practices leave consumers at risk in an era of rising digital payment scams.
With peer-to-peer transactions now a staple of everyday finance, the case could set an important precedent for how payment platforms balance speed, convenience, and consumer protection.
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