OAN Staff Katherine Mosack
11:54 AM – Thursday, August 14, 2025
The State of New York, being represented by New York Attorney General (AG) Letitia James, is now suing the parent company of the digital payment app Zelle.
The lawsuit, filed on Wednesday, alleges that Defendant Early Warning Services, LLC (EWS), which is primarily owned by Bank of America, JPMorgan Chase Bank (JPMC) and Wells Fargo, developed the Zelle app in 2017 in a rash attempt to compete with applications such as Venmo, PayPal and Cash App.
The introduction details the company’s alleged motive: the rise of instant payment apps, like Venmo, had “began to threaten banks’ traditional dominance over consumer payments.” Since they were so “hurried” to “fend off increasing competition,” the plaintiff claims they forewent implementing proper security measures — leaving American consumers susceptible to fraud.
“EWS’s rush to market,” the complaint read, “came with a significant and foreseeable cost: EWS’s key design decisions made the Zelle network an obvious conduit for fraudulent activity.”
The app’s design flaws, according to James, stemmed from allowing users to register solely with an email address or mobile phone number and without requiring any upfront fees, thereby enabling any consumer [to] sign up more than once, link multiple email addresses or mobile numbers to one or more accounts, and seamlessly transfer between existing and new accounts. According to the plaintiff, this resulted in “catastrophic harm to millions of consumers.”
The complaint also alleges that “EWS lured in consumers” by claiming Zelle was “backed by the banks, so you know it’s secure.”
New York claimed that in 2023, EWS finally adopted a “basic network of safeguards,” which had been proposed in 2019 “only after over a billion dollars in consumer losses from reported fraud.” However, they neglected to remedy the losses faced by consumers in the several years before they took action, and consumers “still suffered losses” after the measures were put in place.
A customer of JPMorgan Chase reportedly used Zelle in 2020 to purchase a puppy. The seller demanded multiple payments, each exceeding $1,000, before delivering the puppy. Upon realizing the transaction was a scam, the consumer reported the fraudulent activity to his bank but was informed that “neither Chase nor Zelle could assist.”
“No one should be left to fend for themselves after falling victim to a scam,” the Democrat AG said in a statement. “I look forward to getting justice for the New Yorkers who suffered because of Zelle’s security failures.”
The Empire State is now asking that Zelle be held accountable for the fraud suffered by their consumers, demanding that the parent company uphold anti-fraud measures and compensate New Yorkers for their losses. On the other hand, Zelle maintains that more than 99.95% of transactions completed through their platform are “without scam or fraud reports,” calling the lawsuit a “political stunt to generate press.”
A spokesperson for Zelle responded to the lawsuit in a statement, saying: “The Attorney General should focus on the hard facts, stopping criminal activity and adherence to the law, not overreach and meritless claims.”
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