WASHINGTON (TNND) — New York Attorney General Letitia James filed a lawsuit against the operators of Zelle, a service used to send money between friends, family and local businesses.
What makes the particular case stand out is that the federal Consumer Financial Protection Bureau dropped a similar case as the Trump administration was gutting the agency.
James purposefully filed this lawsuit after the CFPB abandoned their’s following a “change in the federal administration.”
In the lawsuit, James alleged Zelle allowed scammers to steal over $1 billion from customers between 2017 and 2023. Her investigation also found that the company designed the service without security features.
No one should be left to fend for themselves after falling victim to a scam,” James said.
For example, a Zelle user got a call from someone posing as an employee of the utility company Con Edison who told the user that his electricity was going to be shut off unless he sent them money through Zelle. The user then transferred about $1,500 to a Zelle account named “Coned Billing” and then realized he had been scammed, but was told by his bank that he could not get his money back, James’ office said.
Banks were also allegedly aware of the fraud and did not take action. James wants a court order put in place that forces Zelle to take immediate action.
Last week, The Associated Press and other news outlets reported that the Justice Department had subpoenaed James as part of an investigation into whether she had violated Trump’s civil rights, according to people familiar with the matter.
In a statement issued through a spokesperson, Zelle called James’ lawsuit “a political stunt to generate press, not progress.”
“The Attorney General should focus on the hard facts, stopping criminal activity and adherence to the law, not overreach and meritless claims,” the statement said.
Editor’s note: The Associated Press contributed to this report.