Background on Zelle and Early Warning Services
New York Attorney General Letitia James has brought a lawsuit against Early Warning Services, LLC (EWS), which operates the popular peer-to-peer payment app Zelle. The legal action alleges that EWS knowingly allowed fraudsters to exploit its platform, costing consumers over a billion dollars. Zelle was introduced in 2017 by a group of leading banks—Bank of America, JPMorgan Chase, Wells Fargo, PNC, Truist, Capital One, and U.S. Bank—to facilitate fast and easy money transfers. The system links to users’ bank accounts and requires only an email or phone number, with funds moving almost instantly. Though EWS marketed Zelle as a safe way to send money, the complaint argues the company failed to deliver on these assurances.
Fraud Warnings Overlooked
According to court records, EWS learned early in Zelle‘s history that its setup was susceptible to scams. Internal discussions reportedly raised alarms about lacking fraud controls, but EWS took little substantive action for years. Even after suggesting some anti-fraud steps in 2019, the company allegedly dragged its feet, leaving millions at risk. From 2017 through 2023, scams involving Zelle increased sharply, with criminals stealing hundreds of millions from users.
Examples of Zelle Scams Targeting New Yorkers
The lawsuit cites actual cases from New Yorkers who lost money through Zelle scams. In one example, a man received a call from someone impersonating a Con Edison worker demanding immediate payment. He transferred $1,477 via Zelle to an account called “Coned Billing.” His bank refused to refund his money. In another incident, a customer sent $1,100 for a puppy and $1,500 for “shipping insurance,” and then the seller disappeared. Only part of the funds were recovered. Stronger security steps were not implemented by EWS until 2023—six years post-launch—and only after intense pressure from the Consumer Financial Protection Bureau (CFPB), lawmakers, and advocacy groups. Once in place, the new security measures helped curtail fraud despite rising transaction counts. Still, Attorney General James maintains these improvements came too late for existing victims.
About the Lawsuit
Filed on August 13, 2025, in the New York State Supreme Court, the suit accuses EWS of deceptive business practices and misleading advertising, pointing to violations of state law. James seeks to compel EWS to implement robust anti-fraud systems, provide thorough documentation of New Yorkers’ losses, repay affected victims, and forfeit profits earned from misconduct. In a public statement, James remarked, “No New Yorker should be left unprotected after being scammed. We’re determined to achieve justice for those harmed by Zelle‘s security lapses.”
Continuing Where Federal Efforts Paused
The state’s case builds upon a federal action previously filed by the CFPB in December 2024, which was withdrawn in March 2025 after a leadership change. James stated that New York would not let the investigation drop and intends to pursue accountability. The state suit highlights the risks associated with instant-payment technologies lacking proper safeguards, even when managed by top banks. It also demonstrates the crucial role state attorneys general can play when federal authorities step away. A favorable ruling could enhance protection for Zelle users and set a significant precedent for similar platforms.
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