Business ProfileforCiti

The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the governments allegations, which have not yet been proven.

On 1/30/2024, New York Attorney General Letitia James sued Citibank, N.A. (Citi) for failing to protect and refusing to reimburse victims of fraud. The lawsuit alleges that 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. The Office of the Attorney General (OAG) has found that the bank fails to respond to fraudulent activity appropriately and quickly. As a result of Citi’s lax security, New York customers have lost millions of dollars, and in some instances, their entire lifesavings, to scammers and hackers. Attorney General James is seeking to hold Citi accountable for failing to protect its customers and require the company to pay back defrauded New Yorkers with interest, pay penalties, and adopt enhanced anti-fraud defenses to prevent scammers from stealing consumers’ funds. 

The lawsuit alleges that scammers are able to steal tens of thousands of dollars from Citi customers because the bank does not implement strong data security and anti-breach practices. As a result of Citi’s lax security protocols and procedures, ineffective monitoring systems, and failure to respond in real-time and properly investigate fraud claims, New Yorkers have lost millions to scammers. Customers have lost their life savings, their children’s college funds, or even money needed to support their day-to-day lives as a result of Citi’s illegal and deceptive acts and practices.

The OAG found that Citi’s systems do not respond effectively to red flags, such as scammers who are using unrecognized devices, are accessing accounts from new locations, or are changing banking passwords or usernames. Additionally, Citi systems do not flag and stop efforts to transfer funds from multiple accounts into a single account and then send tens of thousands of dollars out the door in minutes. Citi also does not automatically initiate investigations or report fraudulent activity to police or law enforcement authorities when consumers first report it to Citi.In addition, Citi fails to appropriately respond to notifications of fraud by its customers. When victims contact the bank to report fraud, Citi leaves them on lengthy telephone holds, allowing scammers to continue their fraud. Additionally, Citi does not implement sufficient measures to protect consumers from future unauthorized transactions until they visit a local branch. Citi representatives falsely told consumers that their accounts were secure and often promised that their money would be returned, although the bank did not take immediate steps to recover stolen funds. Citi also falsely tells consumers that they need to visit local branches and execute special affidavits detailing the scams that led to their losses — information Citi then used to blame consumers and deny their claims. 

Attorney General James alleges that because Citi makes wire transfers available to consumers online and through mobile banking apps, Citi must reimburse victims of fraud under the Electronic Fund Transfer Act (EFTA), similar to when banks reimburse victims of electronic credit or debit card fraud. Under EFTA, banks such as Citi are required to reimburse their customers for money in their accounts that is lost or stolen through unauthorized electronic payments. However, Citi illegally exploited a narrow exception in these laws to deny consumer claims for reimbursement, resulting in millions of dollars in losses for New York consumers. Through this lawsuit, Attorney General James is seeking to stop Citi’s deceptive practices and to collect restitution for victims who were denied reimbursement in the last six years, penalties, and disgorgement. 

Attorney General James encourages all consumers who have lost money to scammers who hacked into their online or mobile banking, whether the bank accounts were with Citi or any other bank, to report their experiences to OAG’s Consumer Frauds Bureau.