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Citibank Allows Fraudulent Wire Transfers To Proceed After Customers Report Scams, Ask Bank To Freeze Accounts: New York Attorney General

New York Attorney General Letitia James says one of America’s biggest banks does nothing to stop fraudulent wire transfers even after the bank’s own customers call to report fraud and freeze their accounts.


Deep dives on the AG’s accusations in her lawsuit against Citibank are emerging, highlighting allegations that Citibank makes “no effort” to alert fellow banks of wire fraud as it unfolds in real time.



According to James, Citibank will only try to stop fraudulent wire transfers if customers explicitly ask the bank to contact the financial institutions that are receiving the stolen funds.


“…Historically Citi has made no effort to immediately contact beneficiary banks in response to notices of fraudulent activity either to request that stolen funds be frozen or returned.


Citi also has required that consumers explicitly request outreach to beneficiary banks before it will do so in real time. As a result, scammers are able to access and withdraw funds held at beneficiary banks even after consumers have provided notices of fraudulent activity to Citi.”


James says Citibank’s “lax security procedures” have cost customers millions.


“Defendant Citi has not deployed sufficiently robust data security measures to protect consumer financial accounts, respond appropriately to red flags, or limit theft by scam.


Instead, Citi has overpromised and underdelivered on security, reacted 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 early this month, asked a judge to dismiss the case, reports Reuters.


In a filing, the bank said it follows the law and “no system will catch every scam every time” warning the lawsuit could “abruptly and dramatically upset how banks have organized their policies and practices for decades.”


James must respond to the motion to dismiss by May 17th.


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