NewsNew York Attorney General (AG) Letitia James on Wednesday filed a lawsuit against the company behind the electronic payment platform Zelle for failing to protect its users from fraud.
The lawsuit accuses Early Warning Services, LLC (EWS) of rushing its platform Zelle to market in 2017 to compete with Venmo and PayPal, prioritizing speed and ease of use over security. According to the suit, EWS created “an atmosphere conducive to fraud” while falsely marketing the platform as secure. EWS is a financial technology company owned and controlled by several of the nation’s largest banking institutions, including JPMorgan Chase, Bank of America, Capital One, and Wells Fargo. The company promoted the Zelle platform as safe and secure, stating in a 2017 press release: “Send and receive money fast—all with the peace-of-mind that your transactions will be backed by the security of your trusted financial institution.”
The complaint reveals that EWS developed comprehensive anti-fraud safeguards in July 2019 but deliberately withheld implementation until 2023, while consumers lost hundreds of millions of dollars to fraud taking place on the platform, including impersonation scams where fraudsters posed as banks or utility companies, fake purchase schemes for non-existent goods, and account takeover fraud facilitated by the platform’s minimal verification requirements. This delay forms the core of AG James’ legal argument, that EWS knowingly maintained a defective product while misrepresenting its safety. New York Executive Law § 63(12) grants the New York AG significant power to address repeated or persistent fraudulent or illegal acts performed in the course of business. Under New York’s fraud statute, the AG doesn’t need to prove intent to defraud, but merely that representations or omissions were likely to mislead a reasonable consumer acting reasonably under the circumstances.
The lawsuit seeks relief including restitution for all affected New Yorkers, forfeiture of profits, and mandatory implementation of anti-fraud measures. If successful, the case could establish precedent for state-level regulation of payment platforms and potentially trigger similar actions in other jurisdictions, with significant implications for regulatory practices surrounding the fintech industry.
This follows similar federal litigation against EWS. In December 2024, the US Consumer Financial Protection Bureau (CFPB) filed a lawsuit against EWS for allowing fraud to occur on the Zelle platform. However, the lawsuit was dropped in March 2025, amidst mass layoffs at the CFPB.
