New York Attorney General Letitia James has initiated legal action against Citibank, alleging the bank’s failure to protect customers from cyber fraud and its refusal to reimburse victims, resulting in multimillion-dollar losses. The lawsuit asserts that Citibank’s denial of compensation to fraud victims violates the Electronic Fund Transfer Act, which mandates reimbursement for unauthorized electronic transactions. The complaint contends that, as Citibank provides online and mobile banking services for wire transfers, it should offer compensation similar to protections against electronic credit or debit card fraud. The investigation revealed deficiencies in Citibank’s response to potential fraud, including a lack of effective reactions to unrecognized devices, unusual account access, and changing user credentials.
Furthermore, the lawsuit claims Citibank’s failure to flag and prevent multiple account fund transfers allowed cybercriminals to swiftly move tens of thousands of dollars within minutes. The bank allegedly did not automatically initiate investigations or report fraudulent activities to law enforcement after customers filed initial reports. Victims reporting fraud to Citibank faced lengthy telephone holds, enabling scammers to transfer stolen funds to third-party bank accounts. Citibank representatives purportedly assured customers falsely that their funds were secure and promised reimbursement without immediate action, directing victims to local branches for affidavits that were later used to deny claims.
The lawsuit seeks to halt Citibank’s alleged deceptive practices, secure restitution for victims denied reimbursement over the past six years, and pursue penalties and disgorgement. In response, Citibank stated it diligently follows all relevant laws and regulations related to wire transfers, actively preventing threats and assisting clients in recovering losses when possible. The bank highlighted its proactive measures to safeguard client accounts, significantly reducing wire fraud losses through enhanced security protocols, fraud prevention tools, and client awareness initiatives.
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