New York Attorney General Letitia James filed a lawsuit against Zelle, alleging that the electronic payment platform's failure to implement critical safety features enabled fraudsters to steal over $1 billion from consumers. The lawsuit claims Zelle's registration process lacked adequate verification steps.
The Attorney General's office stated that Early Warning Services (EWS), Zelle's owner and designer, knew for years that fraud was rampant but failed to adopt basic safeguards or enforce meaningful anti-fraud rules on its partner banks. James is seeking restitution, damages, and a court order to mandate anti-fraud measures.
While U.S. Bancorp is a partner in the Zelle network, this lawsuit directly targets Zelle and its operator. The allegations of widespread fraud and security vulnerabilities within the platform could lead to increased regulatory pressure and potential operational adjustments for all financial institutions offering Zelle services, including U.S. Bancorp.
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