New York’s Attorney General is suing Citibank for failing to adequately protect customers from fraud and scams.
The lawsuit claims that Citi does not implement strong online protections to prevent unauthorized account takeovers, misleads account holders about their rights after hacks, and illegally denies reimbursement to fraud victims. The Office of the Attorney General (OAG) asserts that the bank does not respond quickly or effectively to fraudulent activity, resulting in significant financial losses for New York customers—some of whom have lost their entire lifesavings. Attorney General Letitia James is seeking accountability from Citi, aiming for the bank to repay defrauded customers with interest, face penalties, and enhance its anti-fraud measures.
“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,” James stated. “Many New Yorkers rely on online banking for daily transactions and savings. If a bank cannot secure its customers’ accounts, they are failing in their most basic duty. There is no excuse for Citi’s failure to protect customers from significant financial theft, and my office will not overlook illegal behavior from large banks.”
According to the OAG, Citi’s systems fail to effectively identify red flags, such as unusual device usage, new locations accessing accounts, or rapid fund transfers to a single account. Furthermore, when consumers report fraudulent activity, Citi does not initiate investigations or alert law enforcement immediately, allowing scams to continue.
Additionally, the OAG reports that when affected customers contact Citi about fraud, they often face excessive hold times, allowing scammers to proceed with their schemes. Citi reportedly does not take sufficient measures to protect customers from future unauthorized transactions until victims visit a local branch and provide detailed affidavits, which Citi then uses to deny claims.
The Attorney General argues that since Citi facilitates wire transfers online and through mobile banking apps, it must comply with the Electronic Fund Transfer Act (EFTA) and reimburse fraud victims, similar to policies for electronic credit or debit card fraud. The OAG claims that Citi has “illegally exploited” an exception in these laws to deny reimbursement claims, leading to substantial losses for New York consumers.
Through this lawsuit, Attorney General James seeks to halt Citi’s deceptive practices and obtain restitution for victims who have been denied reimbursement over the past six years, as well as penalties and disgorgement.
In response, Citi stated: “Citi closely follows all laws and regulations related to wire transfers and works diligently to prevent threats and assist clients in recovering losses when possible. Banks are not obligated to reimburse clients who comply with criminal instructions when there’s no indication of deception.”
Citi added that in light of the industry-wide rise in wire fraud, it has taken proactive measures to protect client accounts through advanced security protocols, fraud prevention tools, and increased client education. The bank claims these actions have significantly reduced client losses due to fraud, and it remains committed to investing in protection measures against new threats.