Jonathan Stempel
NEW YORK (Reuters) – Citigroup on Tuesday asked a federal judge to dismiss New York Attorney General Letitia James’ lawsuit accusing a Citibank unit of failing to repay customers who were victims of online fraudsters. did.
The third-largest U.S. bank acknowledges that the problem of online wire fraud is “real,” but it has rejected federal laws governing electronic fund transfers because wire transfers are expressly excluded. He condemned Mr James’s “misguided” efforts to hold him accountable based on the facts.
Citigroup provides that, under appropriate standards under the Uniform Commercial Code applicable by all U.S. states, if a bank adopts in good faith commercially reasonable safeguards to verify the identity of its customers, it will not be liable for losses. It said it would be exempted from covering.
The New York-based bank said it does this and stops “countless” fraudulent transactions every day.
Citigroup said in a filing in Manhattan federal court that while “no system can catch every fraud every time,” the solution would be “to suddenly and dramatically disrupt the policies and practices that banks have organized for decades.” He said that this is not a lawsuit that would require the government to “let someone do it.”
James’ office did not respond to requests for comment.
The attorney general filed charges against Citibank in January.
He said the company’s security systems failed to effectively investigate red flags such as the use of unrecognized devices, username and password changes, and “phishing,” allowing fraudsters to steal millions of dollars. He said he made it.
In one example, a customer allegedly lost $40,000 in retirement savings after clicking on a link in a text message that appeared to be from Citibank.
Mr. James also accused Citibank of forcing victims to sign affidavits purporting to narrow their ability to recover their losses, and then promptly denying their claims for restitution.
The attorney general wants Citibank to repay defrauded New Yorkers, pay civil penalties of $5,000 for each violation, and appoint an outside monitor to review bank records and identify victims. .
The case is New York v. Citibank NA, U.S. District Court, Southern District of New York, No. 24-00659.
(Reporting by Jonathan Stempel in New York; Editing by Stephen Coates)
