Banks owned by JPMorgan, Bank of America, Capital One, and Wells Fargo sued for enabling widespread Zelle fraud

New York Attorney General Letitia James has sued Early Warning Services, the operator of the electronic payment platform Zelle, for allegedly enabling widespread fraud. The company, owned by major banks including JPMorgan Chase and Wells Fargo, allegedly failed to protect users from massive amounts of fraud despite knowing about it for years. The AG stated that banks were allowed to report fraud complaints to EWS long after it occurred, enabling scammers to target additional consumers.

New York Attorney General Letitia James has filed a lawsuit against Early Warning Services, LLC (EWS), the operator of the electronic payment platform Zelle, alleging that the company enabled widespread fraud by failing to implement critical safety features. The lawsuit, filed on July 2, 2025, seeks restitution and damages for affected New Yorkers, as well as a court order mandating Zelle to maintain necessary anti-fraud measures.

EWS, owned and controlled by major banks including JPMorgan Chase, Bank of America, Capital One, and Wells Fargo, was tasked with developing and operating the Zelle network. The platform, which allows users to send and receive near-instant money transfers through linked email addresses or mobile phone numbers, was launched in 2017. However, the OAG investigation revealed that EWS designed Zelle without critical safety features, leaving users vulnerable to scammers.

The lawsuit alleges that EWS knew about the vulnerabilities of the Zelle network but failed to adopt basic safeguards or enforce meaningful anti-fraud rules on its partner banks. As a result, scammers were able to steal over $1 billion between 2017 and 2023. The most common scams involved unauthorized account access and convincing users to send funds under false pretenses, such as impersonating trusted institutions.

One example of a common scam involved a New York user receiving a call from an individual impersonating a Con Edison employee. The user was told that their electricity would be shut off unless they paid Con Edison via Zelle. The user transferred $1,476.89 to a Zelle account named "Coned Billing," but their bank, JPMorgan Chase, was unable to recover the funds.

The OAG investigation found that EWS and its partner banks knew for years that fraud was spreading on Zelle but failed to take meaningful action to stop it. When participating banks received complaints about fraud, EWS allowed them to report the fraud long after it occurred, enabling scammers to target additional consumers. Even when EWS received reports of fraud, it failed to promptly remove the fraudsters from the Zelle network or require banks to reimburse consumers for certain scams.

EWS developed basic safeguards to address these issues as early as 2019 but failed to adopt them. The company also failed to meaningfully enforce the limited, inadequate anti-fraud rules it did have in place against participating banks despite knowing of widespread violations of those rules.

The lawsuit seeks restitution and damages for all affected New Yorkers and court orders mandating EWS to maintain necessary anti-fraud safeguards and take other steps to protect its customers from fraud. Attorney General James encourages all consumers who have lost money to scammers through Zelle to report their experiences to the OAG’s Consumer Frauds Bureau.

This matter is being handled by Assistant Attorneys General Chris Filburn and Christian Reigstad with the Consumer Frauds and Protection Bureau, which is led by Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine, and is a part of the Division of Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.

References:
[1] https://ag.ny.gov/press-release/2025/attorney-general-james-sues-company-behind-zelle-enabling-widespread-fraud
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3U50J3:0-new-york-sues-zelle-says-security-lapses-led-to-1-billion-consumer-fraud-losses/