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Attorneys general

New York Attorney General Sues Zelle's Parent Company over Security Failures

Strategic Insights

— 1 min read

New York State Attorney General Letitia James has filed a lawsuit against Early Warning Services, the parent company of the Zelle payment platform, for allegedly failing to protect users from fraud. The move comes after the federal Consumer Financial Protection Bureau dropped a similar case earlier this year. James' lawsuit alleges that Zelle's design lacks critical safety features, allowing scammers to access users' accounts or trick them into sending money to bogus accounts. The suit cites a case in which a user was scammed out of $1,500 after being told by a caller posing as a Con Edison employee that his electricity would be shut off unless he sent money through Zelle.

Key Takeaways:

  • The New York State Attorney General's office has filed a lawsuit against Early Warning Services, the parent company of Zelle, for allegedly failing to protect users from fraud.
  • The lawsuit alleges that Zelle's design lacks critical safety features, allowing scammers to access users' accounts or trick them into sending money to bogus accounts.
  • A similar case was dropped by the federal Consumer Financial Protection Bureau earlier this year after the agency's leader was fired and its work was halted by the Trump administration.
  • Attorney General Letitia James' lawsuit cites a case in which a user was scammed out of $1,500 after being told by a caller posing as a Con Edison employee that his electricity would be shut off unless he sent money through Zelle.
  • James has been a leading antagonist of President Trump and has sued him dozens of times.
  • Zelle's parent company denies the allegations, calling the lawsuit a "political stunt to generate press, not progress."
  • The lawsuit seeks to get justice for the New Yorkers who suffered because of Zelle's security failures.

Statistics:

  • Over $1,500 was transferred by a Zelle user to a scammer who posed as a Con Edison employee.
  • Zelle allows users to send and receive near-instant money transfers.
  • The federal Consumer Financial Protection Bureau dropped a similar case against Early Warning Services earlier this year.
  • The agency's leader was fired and its work was halted by the Trump administration.

Sources:

  • AP news wire
  • Statement from Attorney General Letitia James' office
  • Statement from Zelle
  • The Associated Press
  • People familiar with the matter, as reported by The Associated Press.

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