Zelle Litigation
New York Attorney General Letitia James v. Early Warning Services LLC
Date: June 1, 2026
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: ABA filed a coalition amicus brief urging the Supreme Court of New York to dismiss a lawsuit against EWS for allegedly failing to protect Zelle users from fraud.
In August 2025, New York Attorney General Letitia James (NYAG) sued EWS, the operator of Zelle, for failing to protect users from fraud. On April 10, 2026, EWS moved to dismiss, arguing the NYAG cannot state a claim that it engaged in fraud by promoting the safety and security of Zelle. EWS asserted its marketing was not false, deceptive, or misleading and, at most, reflected nonactionable opinion. Additionally, EWS asserted the NYAG cannot state a claim that it engaged in fraud by creating an “atmosphere conducive to fraud” by third parties. EWS maintained that Section 63(12) does not impose liability on a defendant for fraud committed by third parties.
The coalition brief underscored that EWS employs robust security measures to offer an accessible payment service and that the relief NYAG seeks would undermine those efforts. EWS and participating institutions use safeguards such as encryption, identity verification, transaction monitoring, and consumer education. Along with this, 99.98% of payments occur without any reports of suspected fraud or scam activity and that no payment service can ever be immune from fraud.
Despite this record, NYAG asks the court to require EWS to adopt broad, vague, and undefined “antifraud measures.” In any event, ABA argued this requested relief would limit EWS’s ability to respond to evolving threats, force nationwide changes to the network, and create regulatory uncertainty across the banking system.
The brief also underscored that holding EWS liable will not solve consumer scams and will instead deprive communities nationwide of access to a valuable financial service. This case involves authorized payments made under false pretenses, where scammers use calls, texts, or social media to persuade consumers to send money. Importantly, these communications occur outside the knowledge of EWS and participating institutions. ABA noted that EWS and participating institutions often lack visibility into the communications leading up to a payment, leaving them unaware that a recipient may be a bad actor.
In addition, the brief explained that technology alone cannot stop scams that develop over time through sustained manipulation. ABA warned that imposing liability would effectively make financial institutions responsible for scam losses, create a moral hazard, and strain community banks and credit unions. These effects could force smaller institutions to leave the Zelle network or charge fees, reduce access to a widely used payment tool, and push consumers to less secure alternatives.
Bottom Line: ABA argued that the court should dismiss the claims against EWS because imposing liability for scams on Zelle would not prevent fraud, would exceed the scope of Section 63(12), and would disrupt a widely used nationwide payment system.
Documents: Brief
