Zelle Litigation
New York Attorney General Letitia James v. Early Warning Services LLC
Date: Aug.13, 2025
Issue: Whether Early Warning Services LLC (EWS) violated New York’s Executive Law § 63(12) by failing to protect Zelle users from fraud.
Case Summary: New York Attorney General Letitia James (NYAG) sued EWS for failing to protect users from fraud.
In 2017, EWS, a privately held company owned and operated by banks, launched the Zelle payment platform. According to NYAG, EWS rushed Zelle to market to fend off competition from rivals like Venmo, PayPal, and Cash App. To compete quickly, EWS allegedly designed Zelle to be simple, easy, and “frictionless,” but this approach carried a foreseeable cost, as EWS’s design choices made Zelle an obvious target for fraud. For instance, NYAG cited Zelle’s fast registration and lack of verification as features that “make infiltration easy.”
Even though EWS developed and proposed security enhancements and changes to the rules governing the Zelle network to reduce fraud, the NYAG alleged that EWS abandoned these safeguards. In the NYAG’s words, the state sued to “hold EWS accountable for the substantial harm to New Yorkers caused by the Company’s creation of a payment network that was highly susceptible to fraudulent activity, which lacked the basic network safeguards, and that exposed millions of consumers to widespread fraud.”
NYAG sued under New York’s Executive Law § 63(12), which allows for seeking injunctive and equitable relief against entities that repeatedly commit fraud. It defines fraud as creating an atmosphere of deception. In the complaint, NYAG alleged that EWS hastily launched the Zelle network and app, integrating it into banking platforms, despite knowing it lacked adequate anti-fraud protections. In effect, according to the NYAG, fraud became widespread, yet EWS continued to market Zelle as a safe payment method and urged banks to promote this message.
NYAG asks the court to issue an order that: bars EWS from continuing its fraudulent practices; requires EWS to implement and maintain basic network safeguards and other antifraud measures necessary to protect consumers and reduce harm from fraud; compels EWS to account for all New York consumers who reported losses to EWS or its participating banks; and grants restitution, disgorgement, and any other appropriate relief.
Bottom Line: CFPB previously sued EWS over Zelle fraud allegations, but the new administration dropped the lawsuit. NYAG now similarly sues EWS over its Zelle protocols.
Documents: Complaint
