New York Attorney General filed suit against Early Warning Services, co-owned by Capital One and other banks, alleging design flaws enabled over $1 billion in Zelle-related fraud since 2017. The CFPB previously dropped its case, leaving state regulators to highlight inadequate registration and verification processes on Zelle’s 151 million-user network.
On June 27, 2026, New York Attorney General filed suit against Early Warning Services, the joint venture operating Zelle, alleging that the network’s rollout facilitated rampant fraud. The complaint names Capital One alongside Bank of America, JPMorgan Chase and Wells Fargo as co-owners responsible for consumer protections.
The suit highlights Zelle’s expedited registration process and lack of identity verification as primary vulnerabilities that allowed scammers to exploit the system. Regulators argue these design oversights were known at launch and remained unaddressed despite rising fraud reports.
Attorney General’s office claims more than $1 billion was stolen via Zelle transactions from 2017 through 2023, affecting millions of users. Zelle’s network reached 151 million registered users by 2024, amplifying potential liabilities and reputational damage for its owners.
As a co-owner of Early Warning Services, Capital One faces potential legal costs, fines and consumer restitution payments tied to the lawsuit. The bank may also need to bolster fraud prevention measures and disclosures to mitigate further regulatory action.
