A Massive US Bank Is Now Being Sued Over Fraud

January 31, 2024

A massive US bank is now being sued over denying fraud claims after failing to secure its customers’ accounts, sources report.

New York Attorney General Letitia James sued Citi in federal court Tuesday, alleging the bank fails to protect customers from fraud and refuses to reimburse victims.

“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,” 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.”

James cites a case in which a Citi customer, in October 2021, received a text message appearing to be from the bank, instructing her to log onto a website or call her local branch.

The customer clicked the link in the message and later called her branch to report the activity.

The customer alleges Citi told her not to worry about it.

But within three days, she said, she realized a scammer had changed her banking password, enrolled in online wire transfers, transferred $70,000 from her savings to her checking account, and electronically pushed a $40,000 wire transfer.

Such transfers were inconsistent with the customer’s account history, James argued.

The customer stayed in touch with the bank and submitted affidavits, but her fraud claim was ultimately denied, James said.

Particularly, James asserted, Citi is required by the Electronic Fund Transfer Act to reimburse victims of fraud because the bank makes wire transfers available to consumers online and through mobile banking apps.

“Banks are not required to make customers whole when those customers follow criminals’ instructions and banks can see no indication the customers are being deceived,” Citi said in a statement Tuesday seen by CNBC.

The bank said it has “taken proactive steps” to buffer accounts with “leading security protocols, intuitive fraud prevention tools [and] clear insights about the latest scams.”

“Our actions have reduced client wire fraud losses significantly, and we remain committed to investing in fraud prevention measures to help our clients secure their accounts against emerging threats,” the bank said.

A spokesman added that Citi has followed all laws and regulations related to wire transfers, according to CNBC.

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Also Read: A Massive US Bank is Now Closing Credit Cards

Other Banking News Today

Two massive banks in California are now merging in a $233.6 million deal, which is expected to close during the third quarter of 2024.

Southern California Bancorp and California BanCorp plan to merge in an all-stock transaction valued at roughly $233.6 million, the banks announced Tuesday.

Southern California Bancorp’s Chairman and CEO David Rainer will serve as executive chairman of the combined company.

California BanCorp CEO Steven Shelton, meanwhile, will serve as chief executive of the combined company and the combined bank, Banking Dive reports.

Billed as a “merger of equals,” the deal will create a $4.6 billion-asset company with a presence in some of California’s strongest areas for mid-market business banking.

“The expanded scale and capabilities we will have as a result of this merger will enhance our ability to continue adding attractive full banking relationships with commercial clients that provide operating deposit accounts and high quality lending opportunities, as well as enabling us to move up market and work with larger businesses,” Steven Shelton, CEO of California BanCorp, said in a press release Tuesday.

At deal completion, Southern California Bancorp shareholders will own approximately 57% of the outstanding shares of the combined company, and California BanCorp shareholders will own about 43%.

California BanCorp Chairman Stephen Cortese said the company, over the past several years, has invested in talent and technology that strengthened the franchise and led to growth in its client base, increased efficiencies and improved profitability.

“This merger will accelerate the growth of our franchise and further improve our ability to create long-term value for shareholders,” Cortese said in Tuesday’s release.

The companies will evaluate rebranding with new names and logos at the close of the transaction, they said.

Corporate headquarters will be in San Diego.

Also Read: Three Massive Banks Are Now Closing Branches in Pennsylvania

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