Reported by Yaël Ossowski

(Excerpt shared below. To read full report, go to: https://www.realclearmarkets.com/articles/2025/08/26/why_letitia_jamess_zelle_lawsuit_will_not_stop_fraud_1130863.html)

Letitia James is once again ramping up the lawfare machine from her perch as New York Attorney General. This time, rather than pursuing presidential candidates or thwarting DOGE cuts to the bureaucracy, she’s directing legal firepower at fraudsters using peer-to-peer finance apps, specifically Zelle. 

Oddly, it’s not the well-documented networks of scammers and fraudsters using finance apps to lure unsuspecting New Yorkers into financial oblivion that are getting the bulk of James’ ire, but bankers. In a lawsuit filed last week, James is suing the banking consortium that owns Zelle—made up of Bank of America, Capital One, JPMorgan Chase, and others, for failing to catch more instances of consumer fraud. 

While every New Yorker would love to take on the big banks in court, such a lawsuit does nothing to protect or even defend consumers against fraud, and it may ultimately harm them.

By mandating more restrictions and guardrails on how Zelle and other payment apps scrutinize payments, AG James will effectively force the tech app to raise fees, impose transaction limits, and generally erode the customer experience used by countless Americans. The bulk of punishment will befall the financial rails rather than the scammers themselves.

As any banking customer knows, scrutiny of payments is already quite high. Verification and authentication requests, security protocols, and extensive fraud monitoring set a high barrier for customers sending their own money in transactions ranging from pricey home repairs to inexpensive visits to the farmers’ market. 

The more complex the process, the more consumers will just forgo purchases they’d planned to make. 

Due to federal regulations such as the Bank Secrecy Act, institutions are required to collect, log, and verify data on all parties involved in transactions exceeding certain amounts, thereby flagging suspicious activity in a national database.