New York AG sues Zelle operator over alleged fraud protection failures

New York Attorney General Letitia James sued Early Warning Services (EWS), operator of Zelle, alleging it failed for years to protect users from fraud. The state claims EWS ignored basic safeguards until 2023, when new measures sharply reduced consumer losses. The suit seeks restitution for New Yorkers and a court order mandating Zelle maintain anti-fraud measures necessary to protect its users. 

The AG’s suit comes after the CFPB dropped its own 2024 federal lawsuit against EWS and a subset of its owner banks—Bank of America, JPMorgan Chase, and Wells Fargo—which alleged similar misconduct under federal law. Unlike the CFPB’s case, the New York complaint contains no federal causes of action. 

The state’s sole claim is brought under New York Executive Law § 63(12), which allows the attorney general to seek injunctive relief against repeated and persistent fraud, including practices that foster an environment conducive to fraud.  

860 credit unions currently offer the Zelle service to their members, with over one-third of all institutions offering Zelle being a credit union. America’s Credit Unions will monitor the litigation.