Zelle Sued by New York Attorney General for Allegedly Allowing Fraud to Run Rampant on Trillion-Dollar Payments Platform

Payments giant Zelle is being hit with a lawsuit from New York’s attorney general for alleged widespread security failures that harmed its users.

New York Attorney General Letitia James says  she’s suing Early Warning Services, LLC (EWS), the parent company that operates Zelle, for failing to “protect its users from massive amounts of fraud.”

Says James,

“No one should be left to fend for themselves after falling victim to a scam… I look forward to getting justice for the New Yorkers who suffered because of Zelle’s security failures.”

The suit comes following the Consumer Financial Protection Bureau (CFPB) dropping a similar lawsuit against Zelle after President Trump fired the agency’s leader and shut down most of its work.

The original lawsuit, which was filed in December 2024 before Trump took office, alleged that EWS and the big banks often left victims of fraud on the platform to “fend for themselves.”

In March of this year, the CFPB dropped the lawsuit without any explanation.

James’s new suit against Zelle mentions one example of a common scam on Zelle where victims receive a call from someone pretending to be an employee from Con Edison, the largest energy provider in New York City.

New Yorkers are then pressured by the scammers to make certain “delinquent” payments to avoid having their power shut off, according to the statement.

The suit also claims that Zelle’s advertising schemes have been misleading.

“EWS aggressively marketed Zelle to New Yorkers, promising safety and security. However, EWS’s failures enabled fraudsters to run rampant on the Zelle network, leading to millions of dollars in losses for New Yorkers…

Zelle’s advertisements misleadingly promised safe and secure money transfers. In reality, Zelle failed to adopt basic anti-fraud safeguards.”

Source: Office of the New York State Attorney General

James, who is currently being questioned by the U.S. Department of Justice (DOJ) for her lawsuits against the President, is encouraging anyone who has lost money to scammers through Zelle to report their experiences to the Attorney General’s Office’s Consumer Frauds Bureau.

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