New York Attorney General Letitia James filed a lawsuit against Citibank on Tuesday, charging the financial giant of insufficient protection and reimbursement for victims of fraud. The lawsuit claims that Citibank’s poor security and anti-fraud measures caused New York customers losing millions of dollars, including entire life savings, to scammers and hackers.
AG Letitia James said, “Banks are supposed to be the safest place to keep money, yet Citi’s negligence has allowed scammers to steal millions of dollars from hardworking people.” She promised that Citibank’s failure to protect customers’ funds would not be overlooked.
Citibank has allegedly failed to counter unauthorized account takeovers and wrongfully denied to reimburse fraud victims, and provided evasive information about customer rights after account hacks. The lawsuit, filed in the U.S. District Court for the Southern District of New York, argues that Citibank has not managed to keep its promises on security and discounted crucial red flags.
The lawsuit discloses that the bank compels the customers into signing affidavits that enable the bank to handle fraud claims under narrower commercial laws on wire transfers, rather than the more comprehensive protections provided by the Electronic Fund Transfer Act.
The lawsuit provides particular examples, such as a New Yorker losing $40,000 from her retirement savings account to a scammer who conned her with a fake text message from Citibank. Despite continuous attempts to contact the bank, the victim was eventually denied a claim for fraud. Another case involves a customer losing $35,000 due to a scammer who changed online passwords, with Citibank allegedly failing to adequately validify the wire transfer and subsequently denying reimbursement.
Citibank, in response, claimed to adhere firmly to all laws and regulations related to wire transfers and defended its dedication to preventing threats and helping clients in recovering losses. The bank asserted that clients are not guaranteed full reimbursement when they follow criminals’ instructions without indications of deception.
Notably, this legal action piles up on federal regulators’ charges last year that Citibank unlawfully discriminated against Armenian Americans on credit card applications based on their last names. This lawsuit is also the latest action by Attorney General James to hold big banks accountable. Last month, Attorney General James led a coalition of 20 attorneys general in submitting letters to the federal Office of the Comptroller of the Currency and Consumer Financial Protection Bureau urging both agencies to ensure that national banks cooperate with investigations being conducted by state attorneys general.
