Citigroup Faces Legal Battle: A federal judge has ruled that Citigroup must defend itself against a lawsuit filed by New York Attorney General Letitia James. The bank is accused of failing to protect customers from online fraudsters and refusing to reimburse victims.
Court Denies Citigroup’s Request to Dismiss Lawsuit
U.S. District Judge Paul Oetken in Manhattan rejected Citigroup’s request to dismiss the case. The lawsuit claims the bank violated the Electronic Fund Transfer Act (EFTA), a 1978 law meant to protect consumers from fraud involving electronic transfers.
Legal Implications of the Judge’s Ruling
Judge Oetken stated that the EFTA’s purpose is to shield consumers from complex fraud schemes, especially those involving unfamiliar technologies. Financial institutions, such as Citigroup, are better equipped to manage these risks. The court disagreed with Citigroup’s argument that the law did not apply to wire transfers, stating such an interpretation would contradict the statute’s intent.
Citigroup’s Response to the Ruling
Citigroup Faces Legal Battle: Citigroup expressed disappointment with the judge’s decision. The bank is now reviewing its next steps. In its statement, Citigroup defended its security practices, stating they meet industry standards and help prevent numerous fraudulent transactions.
Attorney General’s Statement on Protecting Consumers
Attorney General James welcomed the ruling, stating it would hold Citigroup accountable for protecting its customers. “When New Yorkers deposit their money in a bank, they expect it to be kept safe from scammers and thieves,” she said.
Allegations of Fraudulent Transactions and Denied Reimbursements
The lawsuit claims Citigroup’s security systems failed to detect fraud, including red flags like unrecognized devices and phishing attempts. In one case, a customer lost $40,000 after clicking a fraudulent link that appeared to come from Citibank. James also accused the bank of pressuring customers to sign affidavits limiting their ability to recover losses and rejecting reimbursement claims. The lawsuit seeks restitution for customers who were denied reimbursements over six years, plus a $5,000 fine for each violation.
Citigroup Acknowledges Fraud but Defends Its Security Measures
While Citigroup recognizes the threat of online wire fraud, the bank asserts its systems stop many fraudulent transactions each day.
For more information on this case, visit JacobiJournal.com and read the full source at Reuters.