Zelle operator early warning services are being prosecuted by New York State Attorney General Letitia James, who claims the company has failed to protect its users from “large amount of fraud.”
Zelle operator early warning services are being prosecuted by New York State Attorney General Letitia James, who claims the company has failed to protect its users from “large amount of fraud.”
The New York Attorney General's Office said in a press release Wednesday (August 13) that its investigation found that early warning service design Zelle had no critical security features and stole more than $1 billion from Zelle users between 2017 and 2023.
The lawsuit seeks compensation and damages to New Yorkers and requires a court order to require Zelle to maintain “the anti-fraud measures necessary to protect its users.”
“No one should surrender himself after causing the victims of the scam,” James said in a press release. “I look forward to providing justice to New Yorkers who have suffered from Zelle's security failure.”
A Zelle spokesman arrived at PYMNTS, which said in an email that the company “led the fight to stop fraud and scams in the United States.”
“This lawsuit is a political stunt that causes news rather than progress,” the spokesperson said. “The Attorney General wants to grant the criminals' guaranteed spending to the blueprint without any consequences, opening up the floodgates with more scams, not less.”
A Zelle spokesman also said the lawsuit was a “imitator” in the Consumer Financial Protection Bureau (CFPB) lawsuit, which was dismissed in March.
“Despite the attorney general's claims, they did not investigate Zelle,” the spokesperson said. “If they did the investigation, they would have learned that more than 99.95% of all Zelle transactions were not reported with any scams or frauds, which led to the industry.”
On March 4, the CFPB reportedly dropped the lawsuit against early warning services, and Zelle's three owner banks (JPMORGAN CHASE, Bank of America and Wells Fargo) were “biased.”
The CFPB sued four defendants on December 20, accusing them of violating consumer protection laws because they did not prevent “widespread fraud” on the peer-to-peer payment (P2P) network.
Zelle said at the time that the regulator's complaints were legally flawed and that the company would defend “valued litigation.”
