New York Attorney General Letitia James filed a lawsuit against Citibank N.A. (NYSE:C) that accuses the financial services giant of failing to protect and refusing to reimburse victims of fraud.
In the announcement of her lawsuit, James claimed Citi “does not implement strong online protections to stop unauthorized account takeovers, misleads account holders about their rights after their accounts are hacked and funds are stolen, and illegally denies reimbursement to victims of fraud.” She said the bank’s New York customers lost millions of dollars to scammers and hackers because of Citi’s actions, adding that her office is seeking to have the company pay back defrauded New Yorkers with interest, pay penalties, and enact upgraded anti-fraud defenses.
“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,” said James. “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. There is no excuse for Citi’s failure to protect and prevent millions of dollars from being stolen from customers’ accounts and my office will not write off illegal behavior from big banks.”
Update: Citi contacted the Business Journal with the following statement: “Citi closely follows all laws and regulations related to wire transfers and works extremely hard to prevent threats from affecting our clients and to assist them in recovering losses when possible. Banks are not required to make clients whole when those clients follow criminals’ instructions and banks can see no indication the clients 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.”
Photo by Mike Mozart / Flickr Creative Commons
