Overview of Zelle and Early Warning Services
New York Attorney General Letitia James has filed a lawsuit against Early Warning Services, LLC (EWS), which oversees the widely used payment app Zelle. The suit alleges that EWS enabled scammers to exploit its system, resulting in over a billion dollars in losses to consumers. Launched in 2017 by a coalition of major banks—Bank of America, JPMorgan Chase, Wells Fargo, PNC, Truist, Capital One, and U.S. Bank—Zelle was designed to let people instantly send money through their bank accounts using just an email or phone number. While EWS promoted Zelle as secure, the lawsuit contends those assurances were misleading.
Ignored Fraud Alerts
Legal documents assert that EWS was aware of vulnerability to scams very early after Zelle launched. Reports indicate that internal reviews found serious holes in security, but the company failed to act promptly. Even when minor anti-fraud changes were proposed in 2019, implementation lagged, putting millions of users at risk. Between 2017 and 2023, the number of fraud cases on Zelle skyrocketed, resulting in consumers being cheated out of hundreds of millions of dollars.
Illustrative Examples of Fraud Against New Yorkers
The complaint highlights cases where New Yorkers were deceived: in one case, a scammer claiming to be from Con Edison convinced a man to transfer $1,477 through Zelle to “Coned Billing;” the bank denied him a refund. In a separate incident, someone was tricked into sending $1,100 for a puppy and an extra $1,500 for shipping, only for the seller to disappear. Not all the money was recoverable. EWS didn’t enact meaningful protections until 2023, after significant external pressure including from the Consumer Financial Protection Bureau and lawmakers. These steps have brought fraud losses down, but Attorney General James notes they came far too late for many affected.
Inside the Legal Case
The suit, filed August 13, 2025, in New York’s Supreme Court, accuses EWS of unfair and misleading conduct in violation of state laws. The Attorney General wants the court to compel EWS to improve its anti-fraud protocols, fully report on victims’ losses, reimburse those harmed, and relinquish any profits made from these practices. James emphasized, “No consumer should have to bear the cost after falling victim to a scam. My priority is securing justice for New Yorkers let down by Zelle.”
Stepping Up After Federal Withdrawal
This state lawsuit follows a now-withdrawn federal action from the CFPB, which ended in March 2025 after an administrative change. James made clear New York won’t let the matter go. The litigation draws attention to the risks in real-time payment tools managed by major banks but lacking stringent safety checks, and shows how state authorities can intervene when federal oversight pauses. A judgment in favor of the state could strengthen safety for Zelle users and shape standards for future tech-enabled payment systems.
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