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Citibank maintains poor security and anti-fraud protocols that are leading to consumer losses, New York’s attorney general Letitia James has said as she sues the retail banking giant. 

Citibank does not implement strong online protections to stop unauthorised account takeovers, misleads account holders about their rights after their accounts are hacked and funds are stolen, and illegally denies reimbursement to victims of fraud, a lawsuit brought forward by attorney general James says. 

Investigative work by the Office of the Attorney General (OAG) has found that the bank, which is the fourth largest in the US in terms of assets, fails to respond to fraudulent activity appropriately and quickly. 

As a result of what the OAG says is Citibank’s lax security, New York customers have lost millions of dollars and, in some instances, their entire life savings, to scammers and hackers. 

Now, Democrat attorney general James is seeking to hold the institution accountable for failing to protect its customers and requires the company to pay back defrauded New Yorkers with interest, pay penalties and adopt enhanced anti-fraud defences to prevent scammers from stealing consumers’ funds.

“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,” said James. 

“Many New Yorkers rely on online banking to pay bills or save for big milestones, and if a bank cannot secure its customers’ accounts, they are failing in their most basic duty,” she 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 behaviour from big banks.”

Within the lawsuit, James alleges that because the bank makes wire transfers available to consumers online and through mobile banking apps, it must reimburse victims of fraud under the Electronic Fund Transfer Act (EFTA), similar to when banks reimburse victims of electronic credit or debit card fraud. 

Under EFTA, which was first passed in 1978, banks are required to reimburse their customers for money in their accounts that is lost or stolen through unauthorised electronic payments.

Here, James has accused Citibank of illegally exploiting a loophole in these laws to deny consumer claims for reimbursement, resulting in millions of dollars in losses for New York consumers. 

A spokesperson for Citibank told 91����ԭ�� that it closely follows all laws and regulations related to wire transfers and works extremely hard to prevent threats from affecting its clients and to assist them in recovering losses when possible.

“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,” the spokesperson said. 

“However, given the industry-wide surge in wire fraud during the last several years, we’ve taken proactive steps to safeguard our clients’ accounts with leading security protocols, intuitive fraud prevention tools, clear insights about the latest scams, and driving client awareness and education.”

The spokesperson commented that actions taken by the bank have reduced client wire fraud losses significantly. “We remain committed to investing in fraud prevention measures to help our clients secure their accounts against emerging threats.”