New York Attorney General Letitia James has filed a lawsuit against Early Warning Services (EWS), the parent company of the Zelle electronic payment platform, alleging that security lapses and a failure to implement essential anti-fraud measures led to over $1 billion in consumer fraud losses.
The lawsuit, filed in Manhattan state court, claims that since Zelle's launch in 2017, EWS and its consortium of seven major U.S. banks were aware of the platform's vulnerabilities but did little to prevent widespread fraud.
Key points from the lawsuit:
EWS prioritized a fast launch and ease of use over security, leaving the platform highly susceptible to scams.
For years, Zelle lacked basic safety features and enforcement of anti-fraud rules, even after fraud was rampant.
Common scams involved hackers accessing user accounts, tricking users into payments for fake goods or services, and impersonating utilities or banks.
Victims reported significant losses, with examples including being threatened with utility cutoffs or losing money to fake sellers without adequate support from Zelle or banks.
Zelle only began adopting some basic security measures in 2023, years after these issues became apparent, but these were deemed insufficient for victims who had already lost funds.
The lawsuit seeks to force Zelle to enhance its anti-fraud protections, pay restitution to defrauded New Yorkers, and provide damages.
The case revives efforts abandoned by the U.S. Consumer Financial Protection Bureau earlier in 2025 following a rollback of enforcement under the Trump administration.
Zelle has responded by stating that over 99% of transactions are completed without reported fraud and called the lawsuit a "stunt to press progress."
This litigation shines a spotlight on the challenges of ensuring security in rapidly growing digital payment platforms and the responsibility of their owners to protect consumers.
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