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New York sues Citibank for allegedly not reimbursing fraud victims

New York Attorney General Letitia James claims Citibank failed to protect customers from electronic fraud and then refused to reimburse them.
New York sues Citibank for allegedly not reimbursing fraud victims
Posted at 2:57 PM, Jan 31, 2024
and last updated 2024-01-31 14:57:56-05

The state of New York is suing Citibank for allegedly failing to protect and reimburse victims of fraud.

Attorney General Letitia James filed the lawsuit Tuesday in Manhattan federal court, claiming Citi did not have strong enough protections in place to prevent customer accounts from being hacked. The attorney general's office said the bank also misled victims about their rights after their accounts were stolen, causing them to lose millions of dollars.

"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 said in a statement. "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."

SEE MORE: Why you should never keep all your money in one bank

The lawsuit goes on to list examples of specific Citi customers who had thousands of dollars stolen from their accounts. In one instance, the attorney general's office claims Citi refused to reimburse one woman after a scammer was able to steal $40,000 from her retirement savings account through an unauthorized wire transfer. The complaint includes a similar case in which another New York had $35,000 stolen from their account. 

In a statement obtained by Bloomberg, a Citibank spokesperson said the company "works extremely hard to prevent threats from affecting our clients." However, according to the bank, it is not required to reimburse fraud victims if they followed instructions provided by the scammers, such as providing account info to someone impersonating a Citi employee. 

The New York attorney general's office is seeking for Citibank to provide restitution to all customers who have fallen victim to electronic fraud in the past six years and were denied reimbursement. James is also urging all consumers — whether they are Citi account holders or not — to report any instances of online bank fraud to her office's Consumer Frauds Bureau.


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