Platform: Zelle (Early Warning Services, LLC)
Investigation Status: Active — State Litigation Ongoing
Alleged Consumer Losses: $1 Billion+
Zelle, the widely used peer-to-peer payment platform operated by Early Warning Services, LLC and owned by seven major U.S. banks, is the focal point of the fraud lawsuit filed by New York Attorney General Letitia James in August 2025. The lawsuit alleged that the payment service’s poor security and verification measures allowed scammers to steal more than $1 billion from users.
The Allegations
Filed in a New York state court, the NY AG’s complaint alleges that insufficient security measures used by Early Warning enabled scammers to steal a total of $1 billion from Zelle users. The lawsuit alleges that Early Warning made Zelle registration quicker and simpler, which lacked proper verification, and this enables scammers to execute many different scams on the platform. It alleges that scammers can evade Zelle’s security and identity verification, take control of real users’ accounts, and transfer money into their own accounts.
There was a federal case, which was previously dismissed. On December 20, 2024, the Consumer Financial Protection Bureau filed a lawsuit against Zelle’s operator and three of its owner banks, alleging that they failed to protect customers and violated federal law by allowing scams to run rampant on the extremely popular payment system. The Zelle case alleges that a fintech company, Early Warning Services (EWS), along with Bank of America, JPMorgan Chase, and Wells Fargo, which own Zelle, are responsible for customers losing more than $870 million to scams since its 2017 launch.
However, in March 2025, the Consumer Financial Protection Bureau decided to drop the lawsuit it had filed against the operator of the Zelle payment service and the three banks in the United States, as the federal regulators took a step back from their earlier actions with President Trump back in the White House.
Why New York Stepped In
When the CFPB lawsuit was dropped in March 2025, the attorney general of the state of New York filed the lawsuit against the digital payment service in an attempt to acquire damages for the people of New York. The lawsuit claims that the Early Warning Services, LLC (EWS), the creator of the Zelle app, is aware of the fraud that is occurring on the platform but is doing little to solve the problem.
New York’s decision to pursue the case independently reflects the state’s role as a leading consumer protection jurisdiction, particularly in an environment where federal enforcement activity has become less predictable.
Zelle’s Response
In response to the New York lawsuit, a Zelle spokesperson said that the lawsuit brought by the state of New York is “a political stunt to generate press, not progress,” and is denying the accusations brought by the state of New York, but is reaffirming the security measures that they have in place.
Verification Status: UNDER ACTIVE INVESTIGATION
Zelle remains fully operational and is integrated into hundreds of U.S. banks and credit unions. As of now, there is no regulatory consent order or remediation mandate looming over Zelle. However, the extent of the alleged losses, which total over $1 billion, and the specifics of what happened with regard to security measures and verification processes make this one of the largest ongoing investigations into fraudulent activities within the payment platform space.
What This Means for Users
New Yorkers can still file a complaint if they believe they were the victim of a scam while using Zelle from 2017 to 2023. If you are a resident of New York and were defrauded by Zelle, you may be eligible to participate in an enforcement action by your state. Please visit the New York Attorney General’s website to get updates on how to file your claim or to sign up to get restitution.
For users outside of New York, the case brings to light important issues with regard to account security measures by Zelle. If you are a user of Zelle, it is important to remember to double-check your senders’ information before sending money, to activate two-factor authentication if available, and to report any suspicious activity to your bank and Zelle support immediately.Fintvia Assessment: The Zelle investigation represents a critical test case for payment platform accountability in the post-CFPB enforcement environment. As the New York AG has stepped in with the case after the federal government’s antitrust lawsuit was dismissed, it suggests the potential for state-level consumer protection efforts to take the place of the federal government’s stepped-back efforts. Everyone in the country should be paying close attention to the litigation process with regard to fraud liability for peer-to-peer payment networks.
