New York AG James sues Zelle parent company for alleged fraud

Core Viewpoint - New York Attorney General Letitia James has filed a lawsuit against Early Warning Services (EWS), the operator of the Zelle payments network, for allegedly enabling fraud that resulted in over $1 billion in losses for users between 2017 and 2023 [2][4]. Group 1: Allegations Against EWS - The lawsuit claims that EWS designed Zelle without essential safety features, making it particularly vulnerable to fraud [2][3]. - It is alleged that EWS was aware of the network's susceptibility to fraud from the outset but failed to implement basic safeguards or enforce anti-fraud measures with partner banks [3][4]. - The registration process for Zelle is criticized for lacking verification steps, contributing to its status as a "hub for fraudulent activity" [4]. Group 2: Legal Actions and Responses - Attorney General James is seeking restitution and damages, as well as a court order requiring Zelle to implement anti-fraud measures [4][5]. - This lawsuit follows a similar case dismissed by the Consumer Financial Protection Bureau (CFPB) in March, which had also targeted EWS and major banks involved in Zelle transactions [5][6]. - The CFPB's case was dismissed with prejudice, indicating that the agency will not pursue these claims again [6].