Zelle Accused of $1 Billion Fraud Bungle by New York Attorney General

New York Attorney General Letitia James has accused Zelle, a digital payments network owned by Wall Street banking giants, of enabling fraud by failing to implement anti-fraud measures. The lawsuit claims that scammers stole over $1 billion from Zelle users between 2017 and 2023. Zelle has denied the allegations, saying they are a "political stunt to generate press."

New York Attorney General Letitia James has filed a lawsuit against Zelle, a digital payments network owned by a consortium of Wall Street banking giants, for allegedly enabling fraud by failing to implement adequate anti-fraud measures. The lawsuit, filed on July 2, 2025, claims that scammers have stolen over $1 billion from Zelle users between 2017 and 2023 [1].

The lawsuit, brought by the Office of the Attorney General (OAG), alleges that Early Warning Services, LLC (EWS), the company responsible for developing and operating the Zelle platform, designed the system without critical safety features. This allowed scammers to easily target users and steal significant sums of money [1]. EWS, owned and controlled by banks such as JPMorgan Chase, Bank of America, Capital One, and Wells Fargo, prioritized attracting new users through a simple registration process and quick transfers, leaving consumers vulnerable to fraud [1].

Zelle's advertisements misleadingly promised safe and secure money transfers, but the platform failed to adopt basic anti-fraud safeguards. The OAG's investigation revealed that EWS and its partner banks knew for years that fraud was spreading on Zelle and failed to take meaningful action to stop it [1]. The lawsuit seeks restitution and damages for affected New Yorkers, as well as a court order mandating Zelle maintain necessary anti-fraud safeguards [1].

In response to the lawsuit, Zelle has denied the allegations, stating that the claims are a "political stunt to generate press" [3]. The heated exchange between the Attorney General's office and Zelle highlights the ongoing debate over corporate accountability and the state of clampdowns on fraud in the digital payments industry.

This matter is being handled by Assistant Attorneys General Chris Filburn and Christian Reigstad with the Consumer Frauds and Protection Bureau, which is a part of the Division of Economic Justice, overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy [1].

References:
[1] https://ag.ny.gov/press-release/2025/attorney-general-james-sues-company-behind-zelle-enabling-widespread-fraud
[2] https://www.wsj.com/politics/policy/new-york-attorney-general-picks-up-zelle-lawsuit-abandoned-by-trump-e4ca2acf
[3] https://finance.yahoo.com/news/york-accuses-bank-backed-zelle-093000541.html