New York Attorney General Letitia James filed a lawsuit on Wednesday against Early Warning Services (EWS), the parent company of the Zelle payments network, alleging the company enabled widespread fraud over several years. The action comes months after a similar lawsuit by the Consumer Financial Protection Bureau (CFPB) was dismissed earlier this year.
According to James’ office, EWS designed Zelle “without critical safety features,” creating vulnerabilities that allowed scammers to steal more than $1 billion from users between 2017 and 2023. “EWS knew from the beginning that key features of the Zelle network made it uniquely susceptible to fraud, and yet it failed to adopt basic safeguards to address these glaring flaws or enforce any meaningful anti-fraud rules on its partner banks,” the statement read.
The lawsuit claims Zelle became a “hub for fraudulent activity” due to inadequate verification in its registration process and that both EWS and its partner banks were aware of ongoing fraud for years without taking effective steps to resolve it. James is seeking restitution and damages for affected users, as well as a court order requiring Zelle to implement robust anti-fraud measures.
“No one should be left to fend for themselves after falling victim to a scam,” James said in a statement. “I look forward to getting justice for the New Yorkers who suffered because of Zelle’s security failures.”
The lawsuit follows a similar effort by the CFPB, which sued EWS along with JPMorgan Chase, Bank of America, and Wells Fargo—the three largest banks facilitating Zelle transactions—in December. The CFPB alleged that the companies failed to investigate fraud or reimburse victims. That case was dismissed with prejudice in March under acting CFPB Director Russell Vought, and the agency reportedly agreed never to bring the same claims again.
EWS operates Zelle as a peer-to-peer money transfer platform used by millions of Americans for everyday payments. The new lawsuit from the New York Attorney General signals renewed scrutiny of the network’s security practices and the responsibilities of its banking partners.
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