Zelle, the popular bank-backed peer-to-peer payments service, is defending itself against a lawsuit from New York Attorney General Letitia James, who claims the platform allowed scammers to steal over $1 billion between 2017 and 2023.

Zelle, launched in 2017, has more than 150 million enrolled users and facilitated over two billion payments totaling nearly $600 billion in the first half of 2025. While the Consumer Financial Protection Bureau previously filed a suit over fraud concerns, it was withdrawn in March, but New York’s legal action has renewed scrutiny on the platform’s safety features.

In response, Zelle operator Early Warning insists that fraud is extremely rare, affecting just 0.02% of transactions, and compares that rate to everyday risks like food poisoning or household injuries. The company highlights its use of billions of “Trust Signals” to detect patterns, block scammers, and enforce strong anti-fraud measures since its inception. Ben Chance, GM of Early Warning’s identity and payments risk business, describes the company as “the most powerful financial crime-fighting company you’ve never heard of.”

Despite the controversy, Zelle continues to grow, with total payments in the first half of 2025 rising 23% to nearly $600 billion. Small business transactions surged 31%, representing the platform’s fastest-growing segment. Denise Leonhard, GM of Zelle, emphasizes its integral role in everyday financial life, noting that Zelle provides fast, reliable, and scalable payment solutions for millions of Americans, from rent and childcare to small business transactions.