A New York trial court has ruled that the New York Attorney General's Office may proceed with its lawsuit against Early Warning Services, LLC, the company that owns and operates the Zelle digital payment service.
The decision applies New York's unfair-business-practices statutes to fraud carried out through the payment platform, a novel use of the consumer-protection laws. The court found the state's claims plausible at this early stage of the case, stressing that they have not yet been proven.
Rather than dismissing the action, the ruling sends the case forward into fuller litigation, where the attorney general will have to substantiate allegations about how fraud on Zelle was handled and what the company knew about it.
Consumer advocates say the outcome could influence how financial-technology companies are held accountable when criminals use their services to move money out of victims' accounts, an issue that has drawn scrutiny in Washington and in state capitals across the country.
