Latest news with #EarlyWarningServices
Yahoo
2 days ago
- Business
- Yahoo
New York Accuses Bank-Backed Zelle of $1 Billion Security Bungle
New York Attorney General Letitia James says the digital payments network Zelle, owned by a consortium of Wall Street banking giants, 'has been teeming with fraudsters who have stolen staggering sums from consumers.' Zelle says James' office, which accused its parent Early Warning Services in a lawsuit Wednesday of enabling fraud by doing next to nothing to stop it, is engaging in nothing more than a 'political stunt to generate press.' The heated exchange made for exciting, Billions-style drama, but more importantly, offered a look at the state of clampdowns on Corporate America in 2025 and beyond. READ ALSO: Warren Buffett Reveals Multibillion-Dollar Pre-Retirement Bets and Trump Admin's MAHA Agenda Brings Politics to the Dinner Table New York State of Mind Zelle was launched in 2017 as an alternative to peer-to-peer payment platforms like PayPal and its subsidiary Venmo, with the selling point being that it was backed by the weight of the country's top consumer banks. Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo jointly own its parent, and some 2,200 financial institutions allow customers to use Zelle directly through their app or services. It's not an understatement to say that, with access to the enormous customer base of all these financial institutions, Zelle has taken off. Last year, the network topped $1 trillion in person-to-person transactions, a 27% year-over-year increase, while its user base grew 12% to 151 million accounts. That was the most in P2P transactions for any payments service in a single year — PayPal, by comparison, reported $400 billion in P2P payments in 2024. But Zelle's astronomical growth, the state Attorney General's Office alleged, coincided with negligent loopholes the size of the Milky Way Galaxy: New York's lawsuit claims Zelle's registration process was missing verification steps, which it alleges EWS and its bank backers were aware contributed to fraud amounting to roughly $1 billion, 'for years.' James is seeking restitution and damages based on the claim that scammers stole more than $1 billion from Zelle users from 2017 to 2023, and is asking for a court order requiring Zelle to put anti-fraud measures in place. Zelle, rebuffing the lawsuit, said the Attorney General's Office did not conduct an investigation of its platform and argued the claims are meritless. 'Had they conducted an investigation, they would have learned that more than 99.95% of all Zelle transactions are completed without any report of scam or fraud — which leads the industry,' a spokesperson said. Cases Closed: James' lawsuit suggests that states that disagree with the Consumer Financial Protection Bureau's softening approach to bank oversight may file their own lawsuits where the agency has stepped back, though consumer advocacy groups have questioned whether they could fill the gap. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
Canada News.Net
2 days ago
- Business
- Canada News.Net
Zelle faces New York lawsuit over $1 billion in alleged consumer fraud
NEW YORK CITY: New York Attorney General Letitia James has filed a lawsuit against Zelle, accusing the digital payment platform of failing to implement essential security measures that she says allowed scammers to steal more than US$1 billion from consumers. Filed in New York state court in Manhattan, the case follows the U.S. Consumer Financial Protection Bureau's decision in March to drop a similar action. The CFPB, like other federal enforcement agencies, has scaled back most consumer protection efforts since President Donald Trump returned to the White House. Zelle, launched in 2017 and owned by Early Warning Services, a consortium of seven major U.S. banks, competes with PayPal's Venmo and Block's Cash App. The suit alleges Zelle's parent company and its bank owners knew the platform was vulnerable for years. However, they resisted adopting basic safeguards, sometimes ignoring customer complaints and allowing fraudsters to remain active. According to the complaint, Zelle promoted itself as a safe alternative to cash and checks, "backed by the banks, so you know it's secure," while fraud was "rampant" and often went unaddressed. Zelle disputes the allegations, saying scams occur when criminals trick people into sending money, not because of flaws in its systems. The company said over 99.95 percent of transactions are completed without reported fraud and called the lawsuit "a political stunt to generate press, not progress." The seven banks that own Early Warning Services — Bank of America, Capital One, JPMorgan Chase, PNC, Truist, U.S. Bank, and Wells Fargo — were not named as defendants. James detailed common scams involving hacked accounts, fake goods or services, and impostors posing as banks, government agencies, or utilities. In one case, a victim was told his electricity would be shut off unless he paid $1,477 via Zelle to an account labeled "Coned Billing." Another sent $2,600 for a puppy, only to be asked for more money and realize the seller was fictitious; Chase and Zelle declined to reimburse him. The complaint alleges Zelle didn't adopt "basic" fraud-prevention measures it had identified in 2019 until 2023, after probes by the CFPB and Congress. While fraud reports fell after the changes, James says the protections came "too little, too late" and that substantial fraudulent activity persists. "No one should be left to fend for themselves after falling victim to a scam," James said, seeking stronger anti-fraud systems, restitution, and damages for New Yorkers. The lawsuit is the latest in a string of actions by James against major financial firms. In May, she sued Capital One over alleged interest payment violations, and in June, she settled claims against MoneyGram for remittance transfer failures.
The Independent
3 days ago
- Business
- The Independent
NY vs Zelle: State sues payment app and accuses it of being a scam haven that bilked $1B from users
Zelle is being sued by New York 's attorney general over a lack of critical safety features that have allowed scammers to steal more than $1 billion from users. Attorney General Letitia James filed the lawsuit against Early Warning Services, a technology company owned by the country's largest banks, claiming they failed to protect Zelle users from fraud by not including necessary safety features. An investigation led by James' office found that between 2017 and 2023, scammers were able to steal over $1 billion from Zelle users. The lawsuit claims that Early Warning Signs, Zelle's parent company, knew from the start that features of the payment platform made it susceptible to fraud, but declined to adopt any safeguards. The filing comes months after the federal Consumer Financial Protection Bureau dropped a similar case in March, as the Trump Administration gutted the agency. In a statement, James, a Democrat and longtime critic of President Donald Trump, noted the original suit was abandoned following a 'change in the federal administration.' "No one should be left to fend for themselves after falling victim to a scam," James said. "I look forward to getting justice for the New Yorkers who suffered because of Zelle's security failures.' James' case also argues that Zelle, which allows users to send and receive near-instant money transfers, failed to include adequate verification processes in its platform. Her office said fraudsters were able to gain access to people's accounts or trick people into sending money to phony accounts posing as businesses. In one instance, a Zelle user got a call from someone posing as an employee of the utility company Con Edison, who told him his electricity would be turned off if he didn't send money through Zelle. The victim transferred about $1,500 to a Zelle account named 'Coned Billing' before realizing it was likely a scam. He was then told by his bank that he could not get his money back, James' office said. James' also claimed that Zelle's advertisements misleadingly promised safe and secure money transfers when the banks backing the platform rejected basic, anti-fraud safeguards. Early Warning Services is owned and controlled by several of the country's largest banks, including, JPMorgan Chase, Bank of America, Capital One, and Wells Fargo. In a statement, Zelle called James' lawsuit "a political stunt to generate press, not progress." "The Attorney General should focus on the hard facts, stopping criminal activity and adherence to the law, not overreach and meritless claims," the statement said.
Gizmodo
3 days ago
- Business
- Gizmodo
New York Takes Zelle to Court Over Fraud on the Platform, Claims $1 Billion Lost
Arguably, the entire selling point of Zelle as a platform is that it is owned by big banks that ostensibly are invested in making sure that your money is safe. Turns out security was not the priority that you might imagine, according to New York Attorney General Letitia James. In a lawsuit against the money transfer, the top prosecutor for New York State claims that customers have lost more than $1 billion to fraud on Zelle, which was enabled by a lack of sufficient protections. In the suit, James alleges that Zelle has been insecure since it first launched in 2017, and its parent company, Early Warning Services (which is owned by Bank of America, Capital One, JPMorgan Chase, Wells Fargo, and other major financial institutions), has mostly ignored the problem. 'EWS knew from the beginning that key features of the Zelle network made it uniquely susceptible to fraud, and yet it failed to adopt basic safeguards to address these glaring flaws or enforce any meaningful anti-fraud rules on its partner banks,' the AG's office said in a statement. As evidence of this point, James points out that Zelle didn't include a sufficient verification process to make users confirm their identity, making it easy for scammers to spoof others. Because transactions on Zelle can't be reversed, there is shockingly little friction between transactions to keep people from falling for impostors. The issue was so bad that Congress pressured Zelle into refunding victims of impostor scams back in 2023 after learning that users of the app had lost $440 million to such fraud that year. Not great for a platform that actively advertised itself as 'safe.' Another beef James has with Zelle: It allegedly didn't respond to consumer complaints about fraud. 'Even when EWS did receive reports of fraud, it failed to promptly remove the fraudsters from the Zelle network or require banks to reimburse consumers for certain scams,' James alleged, stating that when the app launched, the parent company didn't even require banks to report scams, which theoretically could have prevented network-wide abuse. New York's lawsuit picks up where the Consumer Financial Protection Bureau left off. The agency had announced it was suing JPMorgan Chase, Bank of America, and Wells Fargo in December 2024, alleging similar charges of fraud and failure to protect users. That case was dropped almost immediately by the Trump administration, which proceeded to fire the head of the bureau and attempted to shutter it entirely. Trump probably can't shut down the state of New York, so this case should likely continue.
Time of India
3 days ago
- Business
- Time of India
New York attorney general sues payment app Zelle, lawsuit comes just months after Trump administration dropped similar case
New York Attorney General Letitia James filed a lawsuit against Early Warning Services , the parent company of the Zelle payment platform, accusing it of failing to protect users from widespread fraud. The move comes months after the federal Consumer Financial Protection Bureau (CFPB) dropped a similar case amid disruptions following a change in federal administration. James, a Democrat, alleges in the New York state court filing that Early Warning Services, owned by a consortium of U.S. banks, neglected to incorporate essential safety features into Zelle's design, leaving users vulnerable to scams. The lawsuit claims Zelle's lack of robust verification processes allowed scammers to access accounts or deceive users into sending money to fraudulent accounts posing as legitimate businesses. 'No one should be left to fend for themselves after falling victim to a scam,' James said in a statement, as reported by news agency AP. 'I look forward to getting justice for the New Yorkers who suffered because of Zelle's security failures.' The suit cites a case in which a Zelle user received a call from someone posing as a Con Edison employee, claiming the user's electricity would be cut off unless $1,500 was sent via Zelle to an account labeled 'Coned Billing.' After transferring the money, the user discovered the scam but was told by their bank the funds could not be recovered, according to James' office. The lawsuit underscores ongoing concerns about the security of peer-to-peer payment platforms like Zelle, which enables near-instant money transfers but has been criticized for inadequate fraud protections. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Stylish New Mobility Scooters Available for Seniors (Prices May Surprise You) Mobility Scooter | Search Ads Search Now Undo What Zelle on New York Attorney General's lawsuit Zelle, through a spokesperson, dismissed the lawsuit as 'a political stunt to generate press, not progress.' The company argued that James should focus on 'stopping criminal activity and adherence to the law' rather than pursuing 'meritless claims.' Why federal Consumer Financial Protection Bureau dropped its case against Zelle The CFPB had initiated a similar case earlier this year but abandoned it after President Donald Trump dismissed the agency's leadership and curtailed its operations, closing its headquarters and laying off staff, James' office noted. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
