[US] Citibank sued by New York after failing to reimburse fraud victims

On January 30, New York state's attorney general's office announced that it had sued Citibank (Citi) for its alleged failure to protect customers from electronic fraud and reimburse victims, Yahoo reports.

It said this failure had cost customers in the state millions of dollars.

Attorney General Letitia James reportedly alleged that Citi's lax security protocols let scammers gain easy access to users' accounts and steal their deposits via unauthorised wire transfers, in a lawsuit filed in Manhattan federal court.

In a statement, Ms 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."

A Citi spokesperson said in a statement that Citi had taken steps to boost security, leading to a significant drop in wire fraud. The spokesman said the bank had followed all laws and regulations related to wire transfers.

"Banks are not required to make clients whole when those clients follow criminals' instructions and banks can see no indication the clients are being deceived," the statement said.

Ms James' lawsuit asked Citibank to disgorge profits, pay a $5,000 fine for each instance in which it violated the law and appoint a third-party monitor to identify all affected customers.

The Attorney General said customers who reported fraud were subject to lengthy telephone holds and were told by Citi staff that they would be reimbursed, despite the bank taking no immediate steps to recover funds.

The lawsuit reportedly referenced two clients. One had $40,000 stolen from her retirement savings account in 2021 after clicking the link in a text message that appeared to be from Citi.

The customer reported the suspicious activity but was told not to worry. However, three days later she discovered that a scammer had changed her banking password and enrolled in online wire transfers. The bank denied her fraud claim.

Another New York customer had $35,000 stolen after reviewing her online account and finding a message stating that it had been suspended and telling her to call a phone number.

A scammer reportedly told the customer that he would send her Citi codes to verify recent suspicious activity. He subsequently transferred all the money in the customer's three savings accounts into her checking account, changed her online passwords and stole the $35,000.

Source: Yahoo

(Quotes via original reporting)

On January 30, New York state's attorney general's office announced that it had sued Citibank (Citi) for its alleged failure to protect customers from electronic fraud and reimburse victims, Yahoo reports.

It said this failure had cost customers in the state millions of dollars.

Attorney General Letitia James reportedly alleged that Citi's lax security protocols let scammers gain easy access to users' accounts and steal their deposits via unauthorised wire transfers, in a lawsuit filed in Manhattan federal court.

In a statement, Ms 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."

A Citi spokesperson said in a statement that Citi had taken steps to boost security, leading to a significant drop in wire fraud. The spokesman said the bank had followed all laws and regulations related to wire transfers.

"Banks are not required to make clients whole when those clients follow criminals' instructions and banks can see no indication the clients are being deceived," the statement said.

Ms James' lawsuit asked Citibank to disgorge profits, pay a $5,000 fine for each instance in which it violated the law and appoint a third-party monitor to identify all affected customers.

The Attorney General said customers who reported fraud were subject to lengthy telephone holds and were told by Citi staff that they would be reimbursed, despite the bank taking no immediate steps to recover funds.

The lawsuit reportedly referenced two clients. One had $40,000 stolen from her retirement savings account in 2021 after clicking the link in a text message that appeared to be from Citi.

The customer reported the suspicious activity but was told not to worry. However, three days later she discovered that a scammer had changed her banking password and enrolled in online wire transfers. The bank denied her fraud claim.

Another New York customer had $35,000 stolen after reviewing her online account and finding a message stating that it had been suspended and telling her to call a phone number.

A scammer reportedly told the customer that he would send her Citi codes to verify recent suspicious activity. He subsequently transferred all the money in the customer's three savings accounts into her checking account, changed her online passwords and stole the $35,000.

Source: Yahoo

(Quotes via original reporting)