Attorney General from New York files lawsuit against Zelle's parent company, accusing the payment system of facilitating extensive fraudulent activities.
The New York Attorney General, Letitia James, has filed a lawsuit against Early Warning Services LLC (EWS), the operator of the popular payment platform Zelle, alleging that the company designed Zelle without critical safety features, enabling over $1 billion in scam payments via the platform from 2017 through 2023.
The lawsuit, filed in New York State Supreme Court, seeks restitution and damages for affected New Yorkers, a court order compelling Zelle to maintain and enforce robust anti-fraud protections, and accountability for deceptive claims about Zelle being a “safe” and “bank-backed” platform that misled consumers about actual security levels.
According to the lawsuit, scammers were able to sign up for Zelle through a quick registration process that lacked verification steps, allowing them to pose as businesses and government entities. The suit also alleges that EWS failed to protect users from fraud, allowing scammers to steal money, and that the company did not require banks to reimburse customers for certain scams.
Moreover, the lawsuit claims that Zelle's irreversible transfers meant that many consumers were not able to get their money back after realizing they had been targeted in a scam. The case revives fraud allegations after the Consumer Financial Protection Bureau (CFPB) dismissed a similar federal lawsuit against Zelle earlier in 2025.
EWS denies wrongdoing and emphasizes that the vast majority (99.95%) of transactions occur without fraud reports. However, the New York AG insists on stronger, court-enforced safety measures to protect consumers going forward.
The lawsuit partially redacts information and alleges that EWS made design choices that made fraud easier, such as allowing multiple registration tokens per bank account and immediate availability of transferred funds, which facilitated rapid loss before victims could intervene. The suit also notes that while some precautions were introduced in 2019, they were abandoned or delayed, and were only reintroduced in 2023 after federal scrutiny began, resulting in a marked reduction in fraud.
The lawsuit also alleges that EWS failed to remove fraudsters from the Zelle network after receiving complaints. This lawsuit comes as the White House has made efforts to sideline the CFPB since President Donald Trump returned to office in January, with the CFPB dropping several lawsuits against companies, including Zelle, earlier this year.
Zelle launched in 2017 as a competitor to popular payment apps like Venmo and Cash App, and as of 2024, Zelle's payment network had grown to 151 million users. The lawsuit against EWS is ongoing, and the company is yet to respond publicly to the allegations.
- The general-news outlet reports that the finance sector, specifically Early Warning Services LLC (EWS) and its payment platform Zelle, are currently under scrutiny for design flaws that allegedly enabled over $1 billion in scam payments.
- The business world is following a legal battle between the New York Attorney General and Zelle's operator, EWS, as the lawsuit seeks to force the company to implement rigorous anti-fraud protections and hold it accountable for misleading consumers about the platform's security.
