New York Sues Zelle Parent Company, Alleging It Enabled Fraud (cnbc.com) 27
New York Attorney General Letitia James has sued Zelle's parent company, Early Warning Services, alleging it knowingly enabled over $1 billion in fraud from 2017 to 2023 by failing to implement basic safeguards. CNBC reports: "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," James' office said in the release. The lawsuit alleges that Zelle became a "hub for fraudulent activity" because the registration process lacked verification steps and that EWS and its partner banks knew "for years" that fraud was spreading and did not take actionable steps to resolve it, according to the press release.
James is seeking restitution and damages, in addition to a court order mandating that Zelle puts anti-fraud measures in place. "No one should be left to fend for themselves after falling victim to a scam," James said in the release. "I look forward to getting justice for the New Yorkers who suffered because of Zelle's security failures." A Zelle spokesperson called the lawsuit a "political stunt to generate press" and a "copycat" of the CFPB lawsuit, which was dropped in March.
"Despite the Attorney General's assertions, they did not conduct an investigation of Zelle," the spokesperson said. "Had they conducted an investigation, they would have learned that more than 99.95 percent of all Zelle transactions are completed without any report of scam or fraud -- which leads the industry."
James is seeking restitution and damages, in addition to a court order mandating that Zelle puts anti-fraud measures in place. "No one should be left to fend for themselves after falling victim to a scam," James said in the release. "I look forward to getting justice for the New Yorkers who suffered because of Zelle's security failures." A Zelle spokesperson called the lawsuit a "political stunt to generate press" and a "copycat" of the CFPB lawsuit, which was dropped in March.
"Despite the Attorney General's assertions, they did not conduct an investigation of Zelle," the spokesperson said. "Had they conducted an investigation, they would have learned that more than 99.95 percent of all Zelle transactions are completed without any report of scam or fraud -- which leads the industry."
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You have received your answer. Not from me, but from the silence.
And knowing she has perpetrated mortgage fraud herself, most likely more than once, we can dispense with the illusion that she serves as a prosecutor.
Go ahead, mod me down. The evidence being published is obvious on inspection.
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Losing? In MAGA's delusional world, maybe. In reality she's won against the orange pedophile. She won against that illegal immigrant from South Africa. She's winning her fraud case against Citi. She won against the NRA. She won against DOT withholding funding conditional on immigration issues. She's been winning cases against state agencies for not doing their duty for low-income people. She won against the pedophile again when she secured Congressionally secured funding from the Department of Educati
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Donald Trump, Adult Sons, and Former Executives Ordered to Pay More Than $450 Million They Fraudulently and Illegally Obtained Donald Trump Banned from Serving as an Officer or Director of Any New York Company for Three Years
Trump was ordered to pay more than $350m in damages in the civil fraud case, which is currently going through the appeals process. Trump was criminally convicted for falsifying business records in a separate case. Last year, he was found guilty on 34 counts for fraudulently classifying reimbursements for a hush-money payment made to adult-film actress Stormy Daniels.
Next on the list - US Mint (Score:2, Insightful)
Because geniuses gave cash to scammers, the US Mint should be sued for all the same reason she listed against Zelle.
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That, and gift card sellers.
If Zelle loses, crypto is boned (Score:4, Insightful)
Crypto is scammer paradise. Zelle to a far lesser degree.
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Crypto is scammer paradise. Zelle to a far lesser degree.
Zelle is a voluntary money transfer service. If you're dumb enough to use it to give money to someone/entity that you wouldn't meet somewhere to hand cash, that's a you problem, not a "Zelle promotes fraud" problem. I understand that we need to protect stupid people from themselves to keep society's gears turning, but this whole thing strikes me as a bit off the mark. In the end, it will either get Zelle shut down for New York, or add a whole lot of inconvenience to those few of us that still use it to pass
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Zelle is a pain in the ass with a ton of security barriers, but at least it's fast when it works right, which is half the time.
How Does She Have Such a Warped View Of The World? (Score:3, Insightful)
No one should be left to fend for themselves after falling victim to a scam
Perhaps. But, that's life. We have to guard ourselves against being scammed. And, when we do get scammed there's no one to help but ourselves. Not even Letitia James.
Why doesn't she prosecute the scammers rather than suing the conduit? Does she sue phone companies for phone scams?
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I was with you until your last paragraph.
Zelle fills a very real gap in digital transactions. PayPal and Venmo offer peer to peer transactions, but the process is relatively cumbersome and slow. Zelle transactions are instantaneous, they show up in your bank account right away, and all you need to know is the recipient's cell number.
My air conditioner service company accepts Zelle and credit cards, but if you pay by credit, they charge a 3% service fee to cover their merchant processing fees. I appreciate t
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No one should be left to fend for themselves after falling victim to a scam
Perhaps. But, that's life. We have to guard ourselves against being scammed. And, when we do get scammed there's no one to help but ourselves. Not even Letitia James.
Why doesn't she prosecute the scammers rather than suing the conduit? Does she sue phone companies for phone scams?
Scammers are hard to catch. Zelle is an easy, non-moving target.
Disingenuous arithmetic (Score:5, Interesting)
Verify what? (Score:3, Interesting)
You're registering with a bank account, it's not like you can do it anonymously. Making instant bank transfers easy to use is just inherently sensitive to fraud, there's a near infinite amount of fresh money mules. Allow people to use Fednow transfers with QR codes and the exact same will happen.
Trivial to initiate instant payments are just broken as a concept. Automated instant payments should be restricted to vetted recipients and physical transactions, for internet transactions with private individuals just keep the money in escrow for a while. Not to allow vague blocks or charge backs, but just a little time for law enforcement to get involved where needed with a court order.
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i don't know man, we're pretty happy here in Argentina with instant bank transfers between any bank in the country.
No fees to pay Visa, no payment processor withholding my money for days or weeks for no reason, and no bogus chargebacks from buyers.
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The US and the EU have instant payments, what they lack is a mandatory standard to automate the transaction like QR codes.
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QR payments in Argentina still charge you a fee (lower than a credit/debit card's fee, but still charge you) and are reversible. Small businesses don't accept these payments, only (irreversible) wire transfers.
The main QR payment platform, Mercadopago, makes QR chargebacks way too easy for the consumer and doesn't provide a counter-claim mechanism for the merchant. Well, they do, but they automatically refuse counter-claims. your money is effectively lost. Better luck next time (this is literally what they
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Why don't stores simply use the Transferencias 3.0 QR codes instead of Mercadopago?
I simply don't understand James's logic (Score:1)