Judge Rejects Zelle Bid to Dismiss New York Fraud Lawsuit

Zelle, launched in 2017, is operated by Early Warning Services, which is owned by Bank of America, Capital One, JPMorgan Chase, PNC, Truist, U.S. Bank and Wells Fargo. New York Attorney General Letitia James alleges the company favored rapid adoption over safeguards, leaving users exposed to scams whose instant transfers are often difficult to reverse. The state case followed the Consumer Financial Protection Bureau’s March 2025 withdrawal of a similar federal action.

James filed the lawsuit in New York state court on Aug. 13, 2025. In a decision issued late on July 20, 2026, Manhattan Justice Phaedra Perry-Bond rejected Early Warning Services’ motion to dismiss, finding the state had sufficiently alleged that consumer safety was sacrificed for accessibility and market growth. James says Zelle users lost more than $1 billion to fraud from 2019 through 2022, before basic safeguards were adopted in 2023. Zelle, which says reports of fraud and scams remain exceptionally low, plans to appeal.