Headlines

NY Attorney General Sues Zelle Over $1B+ Fraud Losses

Published AUG 14 2025

Story

Above: A photo illustration of the Zelle logo on a smartphone screen. Image credit: Nikolas Kokovlis/NurPhoto/Getty Images

The Facts

New York Attorney General Letitia James has sued Early Warning Services (EWS), Zelle's operating company, over allegations that the payment platform enabled scammers to steal over $1 billion from users between 2017 and 2023.
FOX 5 New York
CNN
EWS, an entity owned by major U.S. banks — including JPMorgan Chase, Bank of America, Capital One, Wells Fargo, PNC, Truist and U.S. Bank — launched Zelle in 2017 to compete with payment apps like Venmo and Cash App.
Verge
New York Post
James alleges that Zelle's development was rushed and lacked "critical safety features," resulting in design flaws like a lack of verification and limited transaction details, which allowed scammers to pose as business and government entities, thereby putting Zelle users at risk.
New York State Attorney General
New York State Attorney General
One cited example involved a New York user who transferred $1,476.89 to a fraudulent account called "Coned Billing" after a scammer impersonated a Con Edison employee threatening to shut off the user's electricity.
New York State Attorney General
EWS was allegedly aware of these faults from the beginning, and, despite implementing some effective basic network safeguards in 2019, which they later abandoned, is accused of failing to enforce "even the limited, and inadequate, network rules that did exist" to combat fraud.
New York State Attorney General
The New York attorney general filed the lawsuit after the Consumer Financial Protection Bureau dropped a similar case in March 2025 due to changes in federal enforcement following President Donald Trump's return to office.
New York Post
CNN
Court Listener

Sources Split

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ESTAB

The Spin

Narrative A

Zelle's critical design flaws created a fraudster's paradise that EWS ignored for years. The platform was rushed to market without even the most rudimentary security features, which allowed scammers to easily impersonate legitimate businesses while making transfers irreversible. The result cost New Yorkers and Zelle users across the U.S. hundreds of millions of dollars.

New York State Attorney General

Narrative B

The attorney general's case is a carbon copy of the very same legal proceedings the Consumer Financial Protection Bureau dropped in March. The truth is that more than 99.95% of all transactions on Zelle occur without any reports of fraud or scam, an industry-leading standard. Instead of Zelle, James should focus on the real crime on New York's streets.

CNN