New York Attorney General Letitia James says one of America’s largest banks is doing nothing to stop fraudulent wire transfers, even after the bank’s own customers called to report fraud and freeze their accounts.
Deep insights emerge into the AG’s allegations in her lawsuit against Citibank, highlighting allegations that Citibank makes “no effort” to warn fellow banks about bank fraud as it unfolds in real time.
According to James, Citibank will only try to stop fraudulent transfers if customers explicitly ask the bank to contact the financial institutions receiving the stolen money.
“…Historically, Citi has made no effort to immediately contact beneficiary banks in response to reports of fraudulent activity to request that stolen funds be frozen or returned.
Citi has also required that consumers explicitly request contact from beneficiary banks before they will do so in real time. As a result, scammers can access and withdraw funds from favored banks even after consumers notify Citi of fraudulent activity.”
James says Citibank’s “lax security procedures” have cost customers millions.
“Defendant Citi did not implement sufficiently robust data security measures to protect consumers’ financial accounts, adequately respond to red flags, or mitigate theft through fraud.
Instead, Citi overpromised but underdelivered on security, responded ineffectively to fraud alerts, misled consumers and summarily denied their claims. Citi’s illegal and deceptive practices have cost New Yorkers millions.”
Citibank calls the lawsuit “misguided” and asked a judge early this month to dismiss the case, Reuters reports.
In a filing, the bank says it follows the law and that “no system will catch scams every time,” warning that the lawsuit could “abruptly and dramatically disrupt the way banks have organized their policies and practices for decades.” .”
James must respond to the motion to dismiss by May 17.
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