Customers Sue Citibank After They Refuse to Pay Back the Money Lost During Security Glitch

By: Lauren | Published: Apr 30, 2024

There is no shortage of large banking institutions in the United States, but since it first opened its doors in 1812, Citibank has been a favorite for millions of Americans.

However, the famous institution is now facing some seriously horrific publicity. Citibank is currently being charged in New York City with failing to care for its customers who were scammed out of their hard-earned money, and people are outraged.

The Lawsuit Against Citibank

Most corporate lawsuits are so complex that the average person struggles to understand what they are actually being charged with. But in the case of Citibank, it’s actually quite clear.

Paperwork with the words “Lawsuit” at the top under a judge’s gavel

Source: Freepik

New York Attorney General Letitia James, who is leading the fight against the giant bank, explained in a statement exactly what’s going on. She said, “The lawsuit alleges that Citi does not implement strong 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 victims of fraud.”


Citibank Customers Have Lost Their Life Savings

The AG’s office continued to explain that Citibank customers “have lost their life savings, children’s college funds, or even money needed to support their day-to-day lives due to Citi’s illegal and deceptive acts and practices.”

New York Attorney General Letitia James smiles in her office

Source: New York State Attorney’s Office

New York AG James has several local plaintiffs in the lawsuit, each of whom has a horrific story about how they lost their savings and how their bank, Citi, did absolutely nothing to help.

One Citibank Customer Lost $35,000

One New York resident suing Citibank explained that they fell victim to a scam that resulted in them losing $35,000 of their savings.

A couple hugs and is clearly sad while going over their finances

Source: Freepik

James’ office explained that after the scam, “For weeks, the customer continued to contact the bank and submit affidavits, but in the end, she was told that her fraud claim was denied.”

Cyber Scams Are on the Rise

It’s important to understand how and why this kind of crime occurs. Essentially, because the vast majority of banking is now completed online, cyber hackers have found a wide variety of ways to hack into these systems and steal money from bank customers.

A digital illustration of a cyber hacker using coding to infiltrate a computer

Source: Freepik

These hackers have many ways to steal money directly from a bank account, but the most common way is by calling a customer and pretending to be a customer service representative.

Criminals Call Customers Pretending to Be Customer Service Representatives

Here’s how it works: The criminal calls the phone number associated with the bank account, pretending to be an employee of the bank.

Several customer service representatives talk on the phone in an office

Source: Freepik

They then tell the customer that their money is in jeopardy of being stolen by a cyber hacker and prompt them to provide all of their personal sign-in information and other guarded details so that they can “protect” their money. Of course, with this information, criminals can then access the accounts and wire transfer the contents to their own accounts in seconds.


Why Won’t Citibank Do Anything to Help?

One of the most troubling questions is why, if this is such common knowledge, Citibank is refusing to help its customers who have become victims of these vicious crimes

A woman looks extremely frustrated while speaking on the phone

Source: Freepik

But the bank is claiming that legally, they are not required to refund or even assist customers in getting their stolen money back. Citibank explained in a 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.”


New York Attorney General Argues That Citibank Is Breaking the Law

However, AG James is arguing in court that this claim is simply unfounded and that legally, the bank absolutely does have to compensate customers for unauthorized transfers according to the Electronic Fund Transfer Act (EFTA.)

An exterior of a Citibank location

Source: Adobe Stock

Within the lawsuit, the attorney general quotes Regulation E, a federal statute that ensures American consumers are protected from illegal and unauthorized transactions, including ATM withdrawals, direct deposits, and, she argues, wire transfers. 


James Also Argues That Citibank Must Do More to Protect Its Clients Ahead of Time

In addition to violating the EFTA by not returning the stolen money to its clients, AG James is also alleging that the bank is not doing nearly enough to protect its clients from these kinds of scams.

A businessman using a laptop which shows icons for cyber security

Source: Freepik

According to the AG’s office, “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 under-delivered 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.”


Customers Deserve to Feel Safe Using Online Banking

In a case like this, it’s challenging to find anyone who would side with the bank over the consumer. Tens of millions of Americans use online banking every single day, and they deserve to feel safe doing so.

A photo of two phones from Citibank promoting their online banking app


James said in a statement, “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.”


What Happens if Attorney General James Wins the Lawsuit?

Attorney General James is fighting for a permanent injunction against Citibank for its previous negligent actions, as well as the return of all customer losses from fraud over the past six years and even restitution, damages, and civil penalties for the harmed parties.

A judge hits his gavel in a courtroom

Source: Freepik

That means that if AG James wins her case, Citibank will likely have to pay millions of dollars in restitution to its many customers who had their money stolen. However, in a case like this, that would only be the beginning. If James wins, many more lawsuits against Citi and other banks will likely be filed all over the country.


The Economy Is Tough Enough Without Losing One’s Savings to Scam Artists

The lawsuit against Citibank is coming at a time when life is already hard enough for Americans. The majority of the population is struggling to make ends meet, let alone save. And now, banks are saying they can’t even protect those measly savings from being stolen.

Hands hold a few hundred dollar bills against a gray background

Source: Freepik

America will certainly be watching as this case goes to court, and almost every single person, with the exception of bank executives, will be hoping that the judge sides with the plaintiffs and forces these institutions to protect their customers.