New York sues Zelle, says security lapses led to $1 billion consumer fraud losses

Zelle was sued on Wednesday by New York Attorney General Letitia James, who said the electronic payment platform’s refusal to adopt critical safety features enabled fraudsters to steal more than $1 billion from consumers.

The lawsuit in a New York state court in Manhattan followed the US Consumer Financial Protection Bureau’s decision in March to drop a similar case.

That agency has ended most enforcement activity following President Donald Trump’s return to the White House. 4

Zelle was launched in 2017, and competes with apps such as PayPal’s Venmo and Block’s Cash App.

Its parent, Early Warning Services, is owned by seven large US banks: Bank of America, Capital One, JPMorgan Chase, PNC, Truist, US Bank and Wells Fargo.

James said Zelle’s parent and the banks knew for year