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New York sues Citibank over fraud victim reimbursements
https://www.whatjobs.com/news/usa/us-business-news/new-york-sues-citibank-over-fraud-victim-reimbursements
By Nithya Bose in Business News, posted January 31, 2024
The New York Attorney General has sued Citibank for alleged failure to protect customers from electronic fraud and reimburse those affected.
In the lawsuit, Letitia James accuses the bank of not implementing sufficient security measures to prevent unauthorized access to accounts.
Citibank is accused of misleading fraud victims and unlawfully denying reimbursement claims.
This alleged negligence has reportedly led to the loss of millions of dollars for numerous New York account holders.
Some even lost their entire life savings.
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.
“Many New Yorkers rely on online banking to pay bills or save for big milestones, and if a bank cannot secure its customers’ accounts, they are failing in their most basic duty.”
Citigroup, Citibank's parent company, previously faced challenges in risk management and control systems.
The bank has a history of underinvestment in its infrastructure.
This is largely due to its complex structure formed through numerous mergers over the years.
“Citi’s negligence has allowed scammers to steal millions of dollars from hardworking people"
This was notably highlighted in 2020 when Citigroup mistakenly transferred about $900 million to Revlon's lenders.
Subsequently, banking regulators imposed a $400 million fine on Citigroup and mandated improvements in its risk management systems.
CEO Jane Fraser, who started in 2021, has focused on enhancing the bank’s technology and complying with regulatory requirements.
The lawsuit includes accounts of specific people who lost thousands of dollars and did not receive reimbursement from the bank.
Citibank said it “works extremely hard” to prevent fraud and support customers who fall victim to it.
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The bank said: “Banks are not required to make customers whole when those customers follow criminals’ instructions and banks can see no indication the customers are being deceived.
“However, given the industry-wide surge in wire fraud during the last several years, we’ve taken proactive steps to safeguard our clients’ accounts with leading security protocols, intuitive fraud prevention tools, clear insights about the latest scams, and driving client awareness and education.
“Our actions have reduced client wire fraud losses significantly, and we remain committed to investing in fraud prevention measures to help our clients secure their accounts against emerging threats.”
James claimed in the lawsuit Citibank is required to reimburse fraud victims under the Electronic Fund Transfer Act.
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