Citibank Faces Lawsuit by New York for Failing to Reimburse Fraud Victims
Published on: February 1, 2024.
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Citibank Faces Lawsuit for Failing to Protect Customers from Electronic Fraud
New York state’s attorney general’s office has filed a lawsuit against Citibank, alleging that the bank failed to adequately protect its customers from electronic fraud and reimburse victims, resulting in millions of dollars in losses for customers in the state. The lawsuit, filed in Manhattan federal court, claims that Citibank’s lax security protocols allowed scammers to gain unauthorized access to users’ accounts and steal their deposits through wire transfers.
Attorney General Letitia 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.”
Citibank has responded to the allegations, stating that it has taken steps to enhance security measures, which have resulted in a significant decrease in wire fraud. The bank maintains that it has complied with all laws and regulations related to wire transfers. A spokesperson for Citibank stated, “Banks are not required to compensate clients when clients follow instructions from criminals, and there is no indication that the clients are being deceived.”
The lawsuit filed by Attorney General James seeks various remedies, including disgorgement of profits, a $5,000 fine for each violation of the law, and the appointment of a third-party monitor to identify all customers who suffered harm.
The lawsuit also highlights specific cases of customers affected by the alleged fraud. In one case, a customer had $40,000 stolen from her retirement savings account after clicking on a text message link that appeared to be from Citibank. Despite reporting the suspicious activity, the bank took no immediate action to recover the funds and ultimately denied the customer’s fraud claim.
Another customer had $35,000 stolen after receiving a message in her online account stating that it had been suspended and instructing her to call a phone number. The customer was then tricked into providing verification codes and passwords, allowing the scammer to transfer all the money from her savings accounts into her checking account.
The lawsuit serves as a warning to financial institutions to prioritize the security of their customers’ accounts and take appropriate measures to protect against electronic fraud.
Source: [link to the source article](https://finance.yahoo.com)
