New York Accuses Bank-Backed Zelle of $1 Billion Security Bungle

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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 TableZelle 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.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,453.45 -15.09 (-0.23%)Dow 3044,972.84 +61.58 (+0.14%)Nasdaq21,632.08 -78.59 (-0.36%)Russell 20002,286.51 -12.57 (-0.55%)VIX14.91 +0.08 (+0.54%)Gold3,380.90 -2.30 (-0.07%)PortfolioSign in to access your portfolioSign inTop gainersRUN Sunrun Inc. 14.43 +3.95 (+37.64%)FSLR First Solar, Inc. 203.19 +23.14 (+12.85%)UNH UnitedHealth Group Incorporated 305.08 +33.59 (+12.37%)BHC Bausch Health Companies Inc. 8.44 +0.93 (+12.32%)NXT Nextracker Inc. 60.45 +6.46 (+11.97%)Top losersNEGG Newegg Commerce, Inc. 102.32 -25.77 (-20.12%)GLOB Globant S.A. 66.42 -11.70 (-14.98%)TNXP Tonix Pharmaceuticals Holding Corp. 51.35 -8.23 (-13.81%)AMAT Applied Materials, Inc. 162.64 -25.61 (-13.60%)SLM SLM Corporation 30.14 -2.85 (-8.64%)Most activeOPEN Opendoor Technologies Inc. 3.2550 +0.2150 (+7.08%)INTC Intel Corporation 24.73 +0.87 (+3.66%)NVDA NVIDIA Corporation 180.03 -1.99 (-1.09%)NU Nu Holdings Ltd. 12.97 +0.96 (+8.00%)WULF TeraWulf Inc. 8.91 +0.20 (+2.30%)Earnings eventsTrending tickersUNH UnitedHealth Group Incorporated 304.85 +33.36 (+12.29%)INTC Intel Corporation 24.74 +0.88 (+3.69%)RUN Sunrun Inc. 14.37 +3.89 (+37.12%)AMAT Applied Materials, Inc. 162.63 -25.62 (-13.61%)FSLR First Solar, Inc. 203.25 +23.20 (+12.89%)Top economic events