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The state of New York has filed a lawsuit against Early Warning Services (EWS), the creator of the Zelle payment platform, alleging that the company failed to protect consumers from scams that led to more than $1 billion (approximately Rs. 8700 Crores) in losses between 2017 and 2023.
Attorney General Letitia James announced the lawsuit on Wednesday, claiming that EWS, owned by major U.S. banks including JPMorgan Chase, Bank of America, Capital One, and Wells Fargo, ignored years of evidence that scammers were exploiting the platform.
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Zelle, launched in 2017, allows users to send and receive money through linked phone numbers or email addresses. It has grown to more than 151 million users, processing over $1 trillion (approximately Rs. 87,564 Crores) in payments in 2024. However, New York officials say the platform became “a hub for fraudulent activity” shortly after its debut, with scammers impersonating businesses and government agencies to trick victims into sending money to fraudulent accounts.
Allegations of Ignored Warnings
The lawsuit claims EWS developed basic anti-fraud safeguards as early as 2019 but failed to implement them. It also accuses the company of neglecting to remove known fraudsters or enforce anti-fraud rules on participating banks.
The federal Consumer Financial Protection Bureau (CFPB) filed a similar case in December 2024, reporting that customers of Bank of America, JPMorgan Chase, and Wells Fargo had lost over $870 million (Rs. 7617 Crores) through Zelle scams. That case was dropped in March after the CFPB was largely dismantled following political changes in Washington.
James alleges that hundreds of thousands of fraud complaints were filed, with victims often denied refunds and in some cases told to contact the scammers directly. Common scams included fake utility payment demands, in which victims were threatened with service shutoffs unless they sent money via Zelle.
Company Pushes Back
EWS has dismissed the lawsuit as a “political stunt,” claiming that more than 99.95% of Zelle transactions occur without fraud. The company cited partnerships with the Better Business Bureau and the National Council on Ageing to educate consumers about scams, and noted that banks began refunding some victims in 2023 under regulatory pressure.
