NY attorney general sues Zelle over security failures linked to $1B in fraud

Watch NY attorney general sues Zelle over security failures linked to $1B in fraud - Straight Arrow News on Dailymotion

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00:00New York Attorney General Letitia James is going after Zelle, the popular payment app,

00:05accusing it of failing to protect users from scams.

00:11Her office filed a lawsuit against Early Warning Services, the company behind Zelle,

00:16claiming security gaps allowed scammers to steal more than $1 billion between 2017 and 2023.

00:23The lawsuit says millions of Zelle users could be at risk,

00:26with little recourse if they fall victim to scams.

00:30James says, quote,

00:31No one should be left to fend for themselves after falling victim to a scam.

00:36I look forward to getting justice for the New Yorkers who suffered because of Zelle's security failures.

00:42Payment apps like Venmo, PayPal, and Cash App have shaken up traditional banking,

00:47pushing major banks to launch Zelle in 2017.

00:50The app promised instant fee-free transfers,

00:53but James says its simplicity made it easy for fraudsters to exploit.

00:57Zelle says users should double-check contacts, avoid deals that seem too good to be true,

01:03and know the app does not offer purchase protection.

01:06A Zelle spokesperson called James' lawsuit a publicity move and said over 99.95 percent of transactions are fraud-free.

01:14The lawsuit says, despite warning, Zelle delayed critical anti-fraud measures until 2023,

01:21after millions had already lost money.

01:23The new safeguards have cut fraud, but previous losses remain.

01:27In 2024, the CFPB sued Zelle, but the case was dropped after a change in administration.

01:33James' lawsuit seeks restitution for victims and a court order to ensure Zelle protects all users.

01:39Find the full story right now on SAN.com or by downloading the Straight Arrow News mobile app.

01:44For Straight Arrow News, I'm Kaylee Carey.