A Citibank branch in Singapore's central business district in February. 12, 2018.
Ore Huying | Bloomberg | Getty Images
New York Attorney General Letitia James on Tuesday File a lawsuit against Citibank for its alleged failure to protect and compensate victims of wire fraud.
The suit alleges that Citi did not have robust safeguards in place to prevent unauthorized account takeovers, mislead fraud victims, and unlawfully deny payments, according to the lawsuit. launch. The alleged failure by Citi cost account holders in New York millions of dollars and, in some cases, their entire savings, the attorney general's office said.
“Banks are supposed to be the safest place to keep money, but Citi's negligence allowed fraudsters to steal millions of dollars from hard-working people,” James said in a statement. “Many New Yorkers rely on online banking to pay bills or save for big, and if a bank can't secure their customers' accounts, they're failing in their basic duties.”
Citigroup, Citibank's parent company, has had difficulty managing risks and controls in the past. The bank – the product of decades of mergers that created a patchwork of technology systems – did not invest in its infrastructure, former executives said. that was Clear When Citigroup accidentally sent nearly $900 million to Revlon's lenders in 2020.
Later that year, banking regulators Fined Citigroup paid $400 million and ordered the company to improve its risk management systems. Since taking over in 2021, CEO Jane Fraser has pushed to improve the bank's technology and appease regulators.
The New York lawsuit includes specific people who had thousands of dollars stolen from their accounts and who say the bank did not compensate them.
Citi said in a statement that the bank is “working extremely hard” to prevent threats and assist customers who become victims of fraud.
“Banks are not required to make customers whole when those customers follow the instructions of criminals and banks cannot see any indication that customers are being scammed. However, given the significant rise in online fraud industry-wide over the past several years, we have taken proactive measures,” she said. The company said in a statement: “Steps to protect our customers’ accounts with leading security protocols, intuitive fraud prevention tools, clear insights into the latest fraud, and increased customer awareness and education.” “Our actions have significantly reduced customers’ online fraud losses, and we continue to We are committed to investing in fraud prevention measures to help our customers secure their accounts against emerging threats.”
James claimed in the lawsuit that Citi must compensate fraud victims under the Electronic Fund Transfer Act.
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