New York attorney general sues Citibank, accusing it of lax fraud prevention

In response to the New York attorney general’s lawsuit, a Citi spokesman said the bank does not have to fully compensate customers for certain frauds when they follow the instructions of scammers and that “the bank saw no signs that customers were deceived.”

Nathan Howard/Bloomberg

New York’s attorney general sued Citibank on Tuesday, accusing the giant bank of failing to protect, respond and compensate customers who were victims of fraud.

Attorney General Letitia James accused Citigroup’s U.S. bank unit of failing to implement strong data security and anti-breach measures, failing to respond appropriately to wire fraud claims by customers, and failing to Promptly and fully inform customers of their rights after receiving the remittance. Accounts were hacked and funds stolen. James also accused the bank of illegally denying reimbursement to victims.

Litigation—The Latest on James Action against a major bank – Calls on Citi to pay fines, improve its anti-fraud defenses and reimburse, with interest, New York customers who were defrauded and denied reimbursement over the past six years.

“Banks should be the safest places to keep your money, but Citi’s negligence allowed scammers to steal millions of dollars from hard-working people,” James said in the release. “If banks can’t protect their customers’ accounts, they have failed.” To fulfill their most basic duties.”

In response to the allegations, a Citi spokesperson said in an email that the company “strictly complies with all laws and regulations related to wire transfers and works extremely hard to prevent threats and assist [clients] Recover losses as much as possible. However, banks do not have to fully compensate customers for such fraud when they follow the scammer’s instructions, and “the bank found no indication that the customer was deceived,” the spokesperson said.

A Citi spokesperson added that given the industry-wide increase in wire fraud in recent years, the bank has “taken proactive steps to protect customers’ accounts.” These include adding new security protocols and fraud prevention tools as well as more customer service. educate.

“Our actions significantly reduced customer wire fraud losses, and we remain committed to investing in fraud prevention measures to help our customers protect their accounts from emerging threats,” a Citi spokesperson said in an email.

One of the allegations in the New York attorney general’s lawsuit is that once Citi received notification that customer funds had been stolen, it locked customers’ bank accounts and told them to go to their local Citi branch. The result was that “the investigation was delayed by several hours.” This allowed the fraudsters to “run away with the stolen funds in the beneficiary bank,” the lawsuit said.

The lawsuit also states that customers “lost their life savings” as a result of the fraud and that criminals “died millions of dollars from New York consumers as a result of Citi’s illegal and deceptive acts and practices.”

For example, a Citi customer lost $40,000 when he clicked on a link in a text message that appeared to be from Citi. She didn’t provide more information as requested in the message, but when she notified Citi, she lost $40,000, according to the lawsuit. After the incident, she was told not to worry.

The customer contacted the bank multiple times and submitted affidavits, but Citi said her fraud claims were denied, the lawsuit said.

The attorney general’s lawsuit is the latest challenge facing Citi, which is experiencing Major reforms under chief executive Jane FraserThe $2.4 trillion company is trimming operations, simplifying its management structure and cutting costs in an effort to improve its long-lagging profitability and returns.

Citi has also undergone a multi-year overhaul of its risk management and internal compliance systems. The so-called “transformation” effort is largely a response to two regulatory consent orders issued in 2020. The enforcement actions follow years of concerns at Citi.Many errors occur including Wrong payment Provided $900 million to creditors of cosmetics company Revlon.

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