Leticia James, Prosecutor General of New York, has filed a lawsuit against Citibank for failing to comply with laws protecting customers from fraud. According to James, the bank not only failed to prevent theft of funds from customer accounts but also refused to compensate for losses, in violation of the Electronic Fund Transfer Act (EFTA).
During the investigation, it was discovered that Citibank’s systems did not adequately respond to suspicious activities, such as unauthorized access to accounts from unfamiliar devices or locations. Additionally, the bank failed to prevent transfers between multiple accounts, making it easier for scammers to carry out their fraudulent activities.
The prosecutor’s office alleges that Citibank did not initiate automatic investigations after receiving reports of fraud and did not report these crimes to law enforcement agencies. Victims who reported fraud themselves faced long wait times on the phone, giving fraudsters ample time to transfer stolen funds and create confusion in the financial trail.
Bank representatives are accused of deceiving customers by assuring them of the safety of their funds and promising reimbursement without taking immediate action. Customers were also sent to bank branches to fill out forms, which were later used to deny compensation.
Through the lawsuit, Leticia James aims to put an end to Citibank’s deceptive practices, seek compensation for affected customers, and impose fines and the recovery of unlawfully withheld funds.
Two years ago, James led a coalition of prosecutors that called on major banks, including JPMorgan Chase, Bank of America, U.S. Bank, and Wells Fargo, to eliminate overdraft fees on consumer accounts.
In response to the accusations, Citibank stated that they strictly adhere to all laws and regulations governing electronic transfers. The bank claimed to be actively working on preventing threats to customers and assisting in the recovery of losses whenever possible. Citibank also emphasized its investments in measures to prevent fraud and enhance the security of client accounts.
As this conflict unfolds, it is clear that each party has its own perspective. We will closely monitor the situation and the outcome of the trial. Only time will tell which position will be more convincing and legally justified.
Regardless, the public accusation against Citibank will likely compel other banks to prioritize cybersecurity and