Citibank Faces Lawsuit Over Alleged Negligence in Electronic Fraud Cases
New York Attorney General Letitia James has filed a lawsuit against Citibank, accusing them of failing to protect customers from electronic fraud and reimburse victims.
The lawsuit, filed in Manhattan federal court, alleges that Citibank's lax security protocols enabled scammers to easily access users' accounts, resulting in millions of dollars in losses for customers in the state. James stated, "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."
According to the lawsuit, Citibank customers who reported fraud faced lengthy telephone holds and false assurances of reimbursement, despite the bank taking no immediate action to recover funds. The legal action cites specific cases, including one customer losing $40,000 from her retirement savings account after falling victim to a text message scam, and another losing $35,000 through a fraudulent phone call.
The lawsuit seeks remedies such as disgorging profits, imposing fines for each violation, and appointing a third-party monitor to identify affected customers. James emphasised the urgency of holding banks accountable for their role in protecting customers' funds, stating, "There is no excuse for Citi's failure to protect and prevent millions of dollars from being stolen from customers' accounts, and my office will not write off illegal behaviour from big banks."
The legal action comes amid Citibank's previous challenges with risk management and controls, including a $400 million fine from regulators in 2020. Citibank has defended its position, asserting that it followed all laws and regulations related to wire transfers and highlighting proactive steps taken to enhance security measures.
As electronic fraud continues to be a widespread concern, the lawsuit raises questions about the responsibilities of financial institutions in safeguarding customer accounts and promptly addressing fraud-related issues.