New York Files Lawsuit Against Zelle, Alleges Money Transfer Platform Facilitates Fraudulent Activities
In a significant move, the New York Attorney General Letitia James has filed a lawsuit against Early Warning Services (EWS), the company that operates the popular money transfer service Zelle. The lawsuit, filed in August 2025 in New York Supreme Court, accuses EWS of failing to implement basic and critical safety features to protect users from widespread fraud and scams on the Zelle platform, leading to over $1 billion in consumer losses between 2017 and 2023 [1][2][4][5].
The lawsuit alleges that Zelle was built without critical safety features, and its instant transfer of funds enabled scammers to quickly steal money, preventing consumers from recovering stolen funds [2][4][5]. Additionally, the platform's allowance for seamless shifting of email addresses, bank accounts, and banks facilitated ongoing frauds while evading detection [2][4][5].
The complaint states that EWS designed Zelle with inherent security weaknesses. The registration process, for instance, allegedly omitted key verification steps, allowing scammers to sign up using misleading email addresses [2].
EWS, however, disputes the allegations. The company characterizes the lawsuit as a "political stunt" and a "copycat" of the Consumer Financial Protection Bureau's claim [5]. The company spokesperson emphasizes that more than 99.95% of all Zelle transactions are completed without any report of scam or fraud [5].
The New York suit relies on New York Executive Law § 63(12), which targets repeated and persistent fraud practices that foster environments conducive to fraud. Unlike a prior federal lawsuit by the Consumer Financial Protection Bureau (CFPB), this complaint contains no federal causes of action [1][2][4].
The attorney general seeks restitution and damages for defrauded New Yorkers and a court order compelling Zelle to implement adequate anti-fraud measures to protect users going forward [1][2][4][5]. The lawsuit follows the CFPB’s withdrawal of a similar federal lawsuit in 2025 [1][2][4][5].
It's important to note that EWS is owned by several major banks including JPMorgan Chase, Bank of America, Wells Fargo, Capital One, PNC, Truist, and U.S. Bancorp, though only EWS is named in the suit [1][2][4][5]. The company's response to the lawsuit suggests that it disputes the allegations and views the lawsuit as politically motivated.
The attorney general expressed concern for consumers who have fallen victim to Zelle scams and expressed a desire to seek justice for them [3]. The outcome of the ongoing lawsuit is yet to be determined.
Zelle's emphasis on immediate and irreversible transfers means that by the time consumers realize they have been targeted by fraudsters, their money is often already gone [6]. Anyone with a U.S. bank account could enroll in Zelle and send or receive near-instant money transfers through linked email addresses or U.S.-based mobile phone numbers since 2017 [7]. The attorney general claims that EWS failed to investigate Zelle's security issues, despite widespread fraud allegations [2].
In conclusion, the New York Attorney General's case centers on EWS’s alleged long-term negligence in addressing known fraud vulnerabilities in Zelle, resulting in substantial consumer losses, and seeks both financial restitution and stronger mandated fraud protections [1][2][3][4][5].
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