The Zelle lawsuit 2025 is making headlines as New York Attorney General Letitia James takes legal action against Early Warning Services (EWS), the creator of the popular digital payment platform.
The creator of Zelle, one of the most widely used digital payment platforms in the United States, is facing a major lawsuit from the state of New York over allegations that it failed to protect users from a series of scams that tapped away more than $1 billion between 2017 and 2023.
New York Attorney General Letitia James announced on Wednesday that her office is suing EWS, the financial technology company behind Zelle, claiming it knowingly allowed scammers to exploit the platform for years without putting in place basic safeguards to protect consumers.
From Convenience to Controversy
Launched in 2017, Zelle quickly became a popular in U.S. peer-to-peer payments. It enabled anyone with a U.S. bank account to send or receive money instantly using just an email address or phone number. By 2024, the platform boasted more than 151 million enrolled users and processed over $1 trillion in transactions for the first time.
However, its features that made Zelle popular, instant transfers, easy sign-up, and no middleman delays, also made it a magnet for fraud. Cybercriminals quickly learned to impersonate businesses, utilities, and even government agencies, tricking victims into sending money that, once gone, was nearly impossible to recover.
New York officials say that in many cases, victims had no recourse. By the time they realized they had been conned, the money had long vanished. “Zelle quickly became a hub for fraudulent activity,” James’ office said.
Zelle Lawsuit 2025: Attorney General Targets Early Warning Services
According to the Zelle lawsuit, Early Warning Services was aware of rampant fraud on its platform almost from the start but did little to stop it. Investigators claim EWS failed to adopt anti-fraud tools it developed as early as 2019 and neglected to enforce even its limited safeguards on participating banks, despite knowing these rules were being violated.
The Attorney General’s office cited cases in which New Yorkers were targeted with fake utility payment scams. In one common scenario, victims received urgent calls claiming they were behind on energy bills and faced an imminent power shutoff. The caller would then instruct them to pay immediately through Zelle to what appeared to be a legitimate company account — but was actually a scammer-controlled address.
When victims reported the fraud to their banks, many were told there was nothing the bank could do and that their money could not be returned.
James pointed out that EWS is owned and controlled by some of the biggest names in U.S. banking, including JPMorgan Chase, Bank of America, Wells Fargo, and Capital One. She alleged that these banks, threatened by the rise of rivals like Venmo, PayPal, and Cash App, rushed to launch Zelle without putting sufficient consumer protections in place.
“No one should be left to fend for themselves after falling victim to a scam,” James said. “I look forward to getting justice for the New Yorkers who suffered because of Zelle’s security failures.”
The Zelle lawsuit seeks restitution and damages for affected New Yorkers, as well as a court order requiring Zelle to implement stronger anti-fraud measures.
A Federal Fight with Similar Claims
This legal battle comes just months after the federal Consumer Financial Protection Bureau (CFPB) dropped its own lawsuit against EWS. That suit, filed in December, alleged that customers of major banks lost more than $870 million to scammers using Zelle.
The CFPB complaint claimed that hundreds of thousands of consumers had filed fraud complaints over Zelle transactions, with many denied assistance or even told to contact the scammers directly to recover their funds.
James’ office says her Zelle lawsuit is moving forward precisely because the federal case was abandoned after the CFPB was significantly weakened following changes in leadership in early 2025.
EWS Pushes Back
Early Warning Services has strongly denied the accusations, calling the New York Zelle lawsuit a “political stunt to generate press, not progress.”
In a statement, a spokesperson said the Attorney General’s claims were “meritless” and accused James of trying to “hand criminals a blueprint for guaranteed payouts with no consequences, opening the floodgates to more scams, not less.”
The company also pointed to its fraud statistics, claiming that more than 99.95% of Zelle transactions are completed without any scam or fraud report — a figure it says leads the industry.
EWS argued that the Zelle lawsuit simply mirrors the CFPB’s now-dismissed federal case and disputed that the Attorney General’s office conducted its own investigation.
Efforts to Improve Security
While contesting the allegations, EWS has acknowledged in the past that scammers have targeted its platform. In 2023, it partnered with the Better Business Bureau Institute and the National Council on Aging to launch public awareness campaigns aimed at reducing payment fraud, particularly among seniors.
The company has published blog posts warning consumers about common scam tactics and advising them on how to protect themselves. Under growing pressure from lawmakers and regulators, participating banks began issuing refunds to scam victims in 2023.
Still, James’ office argues that these steps came far too late for many victims and that EWS could have acted years earlier to stem the losses.
Conclusion
The case against Zelle’s creator touches on broader questions about how instant payment services should be regulated in the United States. While platforms like Zelle offer speed and convenience, they also create opportunities for fraudsters who can exploit the lack of built-in transaction reversals.
Consumer advocates have long argued for stronger protections, such as mandatory reimbursement for certain types of scams, similar to protections in place for credit card fraud.
