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NY attorney general files lawsuit against Citibank for failing to protect customers from online fraud


New York Attorney General Letitia James has filed a lawsuit against Citibank for failing to adequately safeguard its customers from online fraud and refusing to reimburse those who suffered financial losses due to unauthorized transactions.

The lawsuit alleges that Citibank violated the Electronic Fund Transfer Act (EFTA), which mandates financial institutions to refund customers for losses resulting from unauthorized electronic transactions, similar to protections for victims of credit or debit card fraud.

An investigation by Attorney General James uncovered security weaknesses in Citibank’s systems. These flaws included the bank’s inability to detect signs of fraudulent activity like logins from unfamiliar devices or locations, changes in user details, and failure to prevent the consolidation of funds into a single account, enabling swift transfer of stolen money by fraudsters.

Customers who reported fraudulent activities faced delays in resolution, giving scammers more time to move funds. Citibank representatives allegedly misled customers by falsely assuring them of fund safety and reimbursement without taking swift action to address the issues.

The lawsuit aims to stop Citibank’s alleged deceptive practices, compensate victims denied reimbursement over the last six years, and seek penalties and disgorgement. This legal action follows Attorney General James’s advocacy to eliminate overdraft fees at major banks.

In response, Citibank has defended its practices, citing compliance with wire transfer laws and regulations. The bank highlighted its dedication to detecting and addressing threats, investing in fraud prevention technologies to secure client accounts against evolving cyber risks.

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