New York Sues Zelle Operator Early Warning Over $1 Billion Fraud

New York Attorney General Letitia James filed suit on Wednesday against Early Warning Services LLC, the bank-owned company that operates the Zelle peer-to-peer payments network, alleging that its failure to implement basic security measures allowed fraudsters to steal more than $1 billion from consumers between 2017 and 2023. The complaint, lodged in a Manhattan state court, contends that Early Warning and its seven owner banks—Bank of America, Capital One, JPMorgan Chase, PNC, Truist, US Bank and Wells Fargo—were aware of systemic vulnerabilities but ignored them and, in some instances, dismissed customer complaints. Typical scams cited include unauthorized account takeovers, payments for non-existent goods and impersonation of utility companies such as Con Edison. James is seeking restitution for victims, unspecified damages and a court order requiring Zelle to introduce stronger anti-fraud controls. The lawsuit revives an enforcement effort that the federal Consumer Financial Protection Bureau dropped earlier this year under the Trump administration. Early Warning Services has not yet commented on the allegations; the owner banks are not named as defendants.