New York Attorney General Letitia James today sued the early warning, LLC (EWS), a company owned and controlled by a group of largest banks in the United States, which had been tasked with the development and operation of the Zelle electronic payment platform because it does not protect their users.
A survey by the Attorney General’s Office (OAG) revealed that EWS designed Zelle without critical security features, allowing cheats to easily target users and steal over 1 billion between 2017 and 2023. Banks of its partners.
Attorney General James filed this lawsuit after the Consumer Consumer Protection Office (CFPB) abandoned a similar lawsuit filed in December 2024, following the change of federal administration. In this lawsuit, Attorney General James is seeking compensation and compensation for the influenced New Yorkers, as well as a court ruling that Zelle maintains measures against the fraud required to protect its users.
EWS is a financial technology company owned and controlled by a group of largest banks in the country, such as JPMorgan Chase, Bank of America, Capital One and Wells Fargo. These banks have commissioned the EWS to hurriedly launch an electronic payment platform to compete with payment applications such as Venmo, Paypal and Cashapp, which were not controlled by banks. In their rush to start, EWS prioritized the attraction of new users through a simple registration and fast -paced process that left consumers vulnerable to scammers
Starting in 2017, the year Zelle started, anyone with a US bank account could be registered with Zelle and send or almost take transfers through linked email addresses or US -based mobile numbers.
Scammers could register with a quick registration process that did not have significant verification steps, allowing them to use misleading email addresses, such as those associated with credible companies or government entities. Zelle’s emphasis on immediate and irreversible transport means that time -consuming consumers realize that they have been targeted by scammers, their money has often gone.
As a result, Zelle quickly became a hub for fraudulent activity. The most common scams were about scammers who gain access to users’ accounts and by making unauthorized transfers, and the fraudsters persuade users to send funds under false intentions, for example, offering non -existent goods or services or with suspected bank or virtue.
OAG’s research revealed that EWS and its partners’ banks have known for years that the fraud was spreading to Zelle and failed to take effective action to stop it. When banks participated, they received complaints from Zelle users about fraud, EWS allowed banks to report that fraud on EWS long after the assembly, which allowed bad actors to deceive additional consumers.
In fact, when Zelle started, EWS did not require participating banks to report scams. Even when EWS received fraud reports, it failed to remove scammers from the Zelle network immediately or to demand banks to return consumers for certain scams.
EWS has developed key safeguards to address these issues as early as 2019, but has failed to adopt them. EWS has failed to substantially impose even the limited, inadequate rules against fraud against participating banks, despite the knowledge of widespread violations of these rules.
EWS is aggressively available to Zelle to New Yorkers, promises security and security. However, EWS’s failures allowed the scammers to run on the Zelle network, leading to millions of dollars for New Yorkers.
Attorney General James claims that EWS has violated the New York law, creating a platform of payments particularly sensitive to fraud and little to stop it for years, and will falsely prevent it as a safe and safe service.
In this lawsuit, Attorney General James is seeking compensation and compensation for all affected new and judicial commands that impose the EWS mandate to maintain the necessary safeguards against fraud and take other measures to protect their clients from fraud.