AG sues Citibank for mishandling fraud after NY customer had $40K stolen from bank account
A New Yorker discovered $40,000 had been stolen from her retirement savings account after receiving a text message appearing to be from Citibank.
After clicking on the link in the message but not providing any additional requested information, she notified her local branch of the suspicious activity and was told not to worry about it, according to the New York Attorney General's Office.
Within three days, her banking password was changed and thousands of dollars were stolen through an electronic wire transfer. Citibank, more commonly known as Citi, eventually denied her fraud claim.
Has something similar happened to you?
"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," New York Attorney General Letitia James said. "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."
The AG's Office says at least 10 New Yorkers have had money stolen from their Citibank accounts by scammers, totaling millions in losses statewide. Some of those customers are located in the New York City or Westchester County area. The Office recently filed a lawsuit against the bank, aiming to increase protections and provide reimbursement to those affected.
What the CitiBank lawsuit says
The AG Office's lawsuit alleges scammers are able to steal tens of thousands of dollars from Citi customers due to a lack of strong data security and anti-breach practices.
Citi, one of the largest banks in the U.S., doesn't implement strong enough 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 fraud victims, according to the lawsuit.
“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," a Citi representative said in a written statement. "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."
NY data breaches: Here's what you should do next
What the AG's Office found
Citi's systems do not respond effectively to suspicious activity, such as scammers using unrecognized devices, accessing accounts from new locations or changing banking passwords or usernames, the AG's Office found. The systems also didn't flag and stop efforts to transfer funds from multiple accounts into a single account.
Additionally, the bank does not automatically initiate investigations or report fraudulent activity to police or law enforcement agencies when first reported by customers. And when victims contact Citi to report fraud, the company leaves them on lengthy telephone holds.
Consumers also aren't well protected from future unauthorized transactions, the AG's office alleged. Bank representatives have falsely informed customers their accounts were secure, often promising the return of their money, without taking immediate steps to recover the stolen funds.
According to the AG Office's findings, the company also falsely tells customers they need to visit their local branches and complete special affidavits detailing the scams that led to their losses. The information was then used to blame the individuals and deny their claims.
NY cannabis industry: Lawsuit claims NY discriminated against white men in cannabis industry as setbacks mount
How the lawsuit aims to help Citibank customers, fraud victims
Since Citi allows consumers to make wire transfers online and through mobile banking apps, the AG's Office says the bank must reimburse its fraud victims under the Electronic Fund Transfer Act (EFTA), which requires banks to reimburse their customers for money lost or stolen through unauthorized electronic payments.
The AG's Office claims Citi illegally exploited a narrow exception in the EFTA to deny consumer's reimbursement claims.
Through the lawsuit, the AG's Office looks "to stop Citi's deceptive practices and collect restitution for victims who were denied reimbursement in the last six years."
If you've been a victim of fraud, the AG's Office is encouraging consumers to report their experiences to their Consumer Frauds Bureau at formsnym.ag.ny.gov.
Emily Barnes is the New York State Team consumer advocate reporter for the USA TODAY Network. Contact Barnes at ebarnes@gannett.com or on Twitter @byemilybarnes.
This article originally appeared on Rochester Democrat and Chronicle: Citibank sued by NY attorney general for fraud after hacking, money loss
