New York judge rejects Zelle parent's bid to dismiss lawsuit on allegedly enabling fraud - report

A New York state court judge has turned down Zelle parent Early Warning Services' bid to dismiss a case filed by the NY attorney general in August 2025 over allegedly enabling widespread fraud, Reuters reported.

EWS is a fintech owned and controlled by a group of large banks, including JPMorgan Chase (JPM), Bank of America (BAC), Capital One (COF), and Wells Fargo (WFC).

The company was tasked with launching an electronic payment platform to compete with payment apps like Venmo, PayPal (PYPL), and CashApp (XYZ).

An investigation by the Office of the Attorney General had found that EWS designed Zelle without critical safety features, allowing scammers to easily target users and steal over $1B between 2017 and 2023.

Attorney General Letitia James had sued EWS for failing to protect its users from massive amounts of fraud.

Justice Phaedra Perry-Bond of a ​New York state court in Manhattan said James sufficiently alleged that EWS "prioritized ​accessibility, convenience, consumer adoption, and market dominance at the expense of consumer safety", the newswire noted on Wednesday.

Additionally, Zelle is still collecting and retaining fees from fraudulent transactions, Perry-Bond reportedly said.