WASHINGTON (dpa-AFX) - New York Attorney General Letitia James has filed suit against Early Warning Services, operator of the Zelle payment network, accusing the company of enabling scammers to steal more than $1 billion from users between 2017 and 2023.
Filed in New York State Supreme Court, the complaint alleges EWS knowingly launched Zelle without essential security safeguards, ignored warnings about its susceptibility to fraud, and failed to impose effective anti-fraud protocols on its partner banks.
EWS, jointly owned by major U.S. lenders including JPMorgan Chase, Bank of America, Capital One, and Wells Fargo, allegedly allowed criminals to exploit Zelle's rapid sign-up process, which lacked meaningful identity verification.
This made it easier for fraudsters to impersonate businesses or government agencies. Because Zelle transfers are irreversible, victims often had no recourse such as one New Yorker who lost $1,500 to a fake utility account.
James is seeking restitution, damages, and a court order compelling Zelle to implement stronger security measures. 'No one should be left to fend for themselves after falling victim to a scam,' she said.
A Zelle spokesperson rejected the lawsuit as a 'political stunt' and 'copycat' of a Consumer Financial Protection Bureau case dismissed in March, claiming more than 99.95 percent of Zelle transactions are completed without fraud.
The case intensifies scrutiny of peer-to-peer payment services amid mounting concerns over consumer protection in digital finance.
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