AG Letitia James says the developers of Zelle peer-to-peer payment app left users exposed to fraud

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AG Letitia James sues Zelles operator, Early Warning Services, over failure to prevent fraud that cost users over $1 billion
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Lawsuit alleges Zelle was designed without essential safeguards and marketed falsely as safe
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Case seeks restitution for New Yorkers and court-ordered anti-fraud protections going forward
New York Attorney General Letitia James has filed a sweeping lawsuit against Early Warning Services, LLC (EWS), the operator behind the popular peer-to-peer payment app Zelle, accusing the company of failing to protect consumers from widespread fraud that drained over $1 billion from users between 2017 and 2023.
The lawsuit, announced today, paints a damning picture of how Zelle was designed and operated. According to the New York Attorney Generals Office, EWSa company owned by major U.S. banks including JPMorgan Chase, Bank of America, Capital One, and Wells Fargolaunched Zelle hastily, prioritizing speed and user growth over security. The result, the lawsuit claims, was a platform ripe for exploitation by scammers.
No one should be left to fend for themselves after falling victim to a scam, said AG James. I look forward to getting justice for the New Yorkers who suffered because of Zelles security failures.
Fraud made easy, recovery nearly impossible
Zelle, which enables near-instant transfers between U.S. bank accounts using only email addresses or phone numbers, offered few verification protections at sign-up. Scammers routinely created accounts that mimicked trusted entitiessuch as utilities or government agenciesand tricked consumers into sending money under false pretenses. Once transferred, the money was often unrecoverable.
In one example cited in the lawsuit, a New Yorker was duped into sending $1,476.89 to a Zelle account labeled Coned Billing after receiving a call from someone impersonating a Con Edison employee. The consumers bank, JPMorgan Chase, refused to refund the loss, claiming it could not retrieve the funds.
The OAG says EWS knew of such from the start, failed to enforce its own minimal anti-fraud policies, and did not require banks to report fraudulent transactions in a timely mannerallowing fraudsters to repeatedly target new victims.
Ignored warnings and abandoned safeguards
EWS reportedly developed basic fraud prevention tools as early as 2019 but failed to implement them, even as fraud reports mounted. Although a federal lawsuit on the issue was dropped by the Consumer Financial Protection Bureau earlier this year, New Yorks lawsuit seeks restitution and damages for victims and court-enforced reforms to mandate robust fraud protections.
Despite being marketed as a safe alternative to apps like Venmo and PayPal, Zelles lack of safeguards has turned it into a haven for scammers, the lawsuit alleges. Attorney General James contends that EWSs failure to act constitutes a clear violation of New York consumer protection laws.
The case signals renewed pressure on fintech platforms to prioritize consumer safetyor face legal consequences.
Posted: 2025-08-13 18:03:56