New York AG Sues Zelle Over $1 Billion in Consumer Fraud Losses #
New York Attorney General Letitia James has filed a lawsuit in state court against Early Warning Services, the operator of the Zelle payment platform. She alleges that Zelle failed to implement essential security measures—despite knowing of vulnerabilities—allowing scammers to steal more than $1 billion from consumers between 2017 and 2023 by exploiting weak verification and ignoring red flags. Examples cited include scams where victims sent large sums to accounts labeled as “Coned Billing” or to bogus sellers. Zelle contested the lawsuit, calling it a “political stunt,” and insists that over 99.95% of its transactions are fraud-free
The suit follows a similar case by the CFPB that was dropped as enforcement efforts declined under the Trump administration. AG James is seeking restitution, damages, and a court-mandated overhaul of anti-fraud protections to safeguard consumers in the future