New York Attorney General Letitia James has filed a lawsuit against Early Warning Services, LLC (EWS), the company that operates Zelle.
She is accusing EWS of enabling widespread fraud that cost users more than $1 billion between 2017 and 2023.
The lawsuit, announced on August 13, 2025, alleges that EWS—owned by major U.S. banks including JPMorgan Chase, Bank of America, Capital One, and Wells Fargo—launched and marketed Zelle without sufficient security measures, knowingly leaving consumers vulnerable to scammers.
A Platform Built for Speed, Not Safety
According to the complaint, EWS designed Zelle to prioritize rapid user growth and near-instant transfers to compete with rivals like PayPal, Venmo, and CashApp. The streamlined sign-up process allowed scammers to exploit the system with minimal verification, often registering accounts using deceptive email addresses and phone numbers linked to trusted institutions.
Zelle’s hallmark feature—immediate and irreversible transfers—made it especially attractive to fraudsters. By the time victims realized they had been duped, their money was often unrecoverable.
Fraud Victims Left Empty-Handed
The Attorney General’s Office cited numerous scams that proliferated on Zelle, including impostors posing as utility workers, banks, or government agencies.
In one case, a New Yorker received a call from a fraudster impersonating a Con Edison employee. The caller threatened to cut off the victim’s electricity unless payment was made via Zelle. The victim transferred $1,476.89 to an account labeled “Coned Billing.” When the fraud was discovered, JPMorgan Chase informed the consumer that the money could not be recovered.
Despite such cases, the OAG found that EWS failed to require partner banks to promptly report fraudulent accounts or compensate victims. Even after developing potential safeguards in 2019, the company allegedly declined to implement them.
State vs. Federal Action
Attorney General James filed the lawsuit after the Consumer Financial Protection Bureau (CFPB) dropped a similar federal case filed in late 2024. The CFPB’s withdrawal followed a change in the federal administration, leaving state enforcement as the primary avenue for consumer protection.
“With this lawsuit, Attorney General James is seeking restitution and damages for New Yorkers who lost money to scams, as well as a court order requiring Zelle to adopt effective anti-fraud safeguards,” the Attorney General’s office said.
James pointed out the broader principle at stake: “No one should be left to fend for themselves after falling victim to a scam. I look forward to getting justice for the New Yorkers who suffered because of Zelle’s security failures.”
Pattern of Consumer Protection Cases
This action marks the latest in a string of high-profile consumer protection lawsuits led by AG James.
- In June 2025, she sued payday lending companies DailyPay and MoneyGram for alleged predatory practices.
- In May 2025, she filed suit against Capital One, accusing the bank of cheating customers out of millions in interest.
- In January 2024, she sued Citibank for failing to protect customers from fraud.
- In April 2022, she spearheaded a multistate effort urging major banks to eliminate overdraft fees.
What’s Next
The lawsuit seeks to hold EWS accountable under New York consumer protection laws and to set a precedent for stronger regulation of bank-operated payment systems.
New Yorkers who lost money through Zelle scams are encouraged to file reports with the OAG’s Consumer Frauds Bureau.
