New York Attorney General Letitia James Files Lawsuit Against Zelle Operator Over Alleged $1B In Fraud
New York Attorney General Letitia James has filed a lawsuit against Early Warning Services (EWS), the company behind the popular payment app Zelle, accusing it of failing to protect users from what she calls “massive amounts of fraud,” CNN reports.
The lawsuit, filed Wednesday (Aug. 13) in New York State Supreme Court, according to court documents, alleges that Zelle’s key features made it easy for scammers to exploit the platform, resulting in over $1 billion in stolen funds. The documents also state that EWS is owned by a consortium of major U.S. banks, including JPMorgan Chase, Bank of America, Capital One, and Wells Fargo.
“No one should be left to fend for themselves after falling victim to a scam, and I look forward to getting justice for the New Yorkers who suffered because of Zelle’s security failures,” James said in a statement, per CNN.
According to the complaint, Zelle’s quick sign-up process lacked proper verification steps, enabling fraudsters to pose as legitimate businesses or government agencies. In one case, according to CNN, a New York resident was tricked into sending nearly $1,500 to a fake account labeled “Coned Billing,” posing as Con Edison, after being threatened with a bogus electricity shut-off notice. His bank, JPMorgan Chase, allegedly told him it couldn’t recover the funds.
CNN also reports that the lawsuit claims Zelle’s irreversible transactions left countless victims unable to get their money back and that EWS and its partner banks knew about the fraud problem for years but failed to take meaningful action.
EWS launched Zelle in 2017 to compete with apps such as Venmo and Cash App and reached a milestone of 151 million users in 2024, helping Americans — both consumers and small businesses — send more than $1 trillion, marking the largest annual total ever for a person-to-person payment service, according to a company press release.
While EWS began implementing basic anti-fraud measures in 2023, as CNN reports, the lawsuit says these came years after they were first proposed — and only after fraud had spiraled.
This isn’t the first legal challenge for Zelle’s operator. In December 2024, the Consumer Financial Protection Bureau (CFPB) sued EWS and several of its owner banks for “allowing fraud to fester,” alleging that hundreds of thousands of fraud complaints were largely ignored. That case was later dropped earlier this year — part of what CNN reports is a broader rollback in consumer protection enforcement since President Donald Trump returned to office in January.
James’ office is now seeking recovery and damages for New Yorkers impacted by scams on Zelle. It is also requesting a court order compelling the platform to put stronger anti-fraud protections in place.
