State sues bank for refusing to help scam victims
By Greg Collier
Over the past few years, there has been a tremendous surge in banking scams that target consumers. While these scams take many firms, they all have one thing in common. Scammers will pose as the victim’s bank while directing the victim to move their money. Even when they’ve been promptly notified by their customers, many banks have refused to assist scam victims. The banks have argued that since the customers allowed access to their accounts, even under deceptive circumstances, they are still responsible for the fraudulent transactions. However, a state office has taken exception to this stance and is actively seeking to address the issue on behalf of scam victims.
The New York Attorney General’s Office has initiated legal action in the US District Court against Citibank, one of the country’s major financial institutions. The lawsuit alleges that Citibank engaged in illicit and deceptive practices by rejecting the claims of scam victims in New York. Additionally, the bank is accused of maintaining inadequate security measures to safeguard customer accounts, disregarding warning signals, and responding inadequately to fraud alerts.
The New York Attorney General’s office highlighted two specific instances in its legal filing where it alleges Citibank failed to uphold its responsibilities. In the first case, Citibank attempted to verify a $35,000 wire transfer, but when the customer was unavailable to answer her phone, the bank approved not only the initial fraudulent transfer but also a second one of the same amount. Furthermore, in another incident, when a customer fell victim to a fraudulent link in a text message and reported it to their local Citibank branch, they were reassured and told not to be concerned. Subsequently, scammers managed to siphon over $100,000 from the customer’s account. In both situations, Citibank allegedly denied the fraud claims made by the affected customers.
In a statement to Ars Technica, Citibank defended their practices when it comes to scam victims with the following 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,” the company said.
The recent incidents involving Citibank underscore the pressing need for a reevaluation of the role and responsibility banks bear in safeguarding their customers from scams. The New York Attorney General’s lawsuit sheds light on instances where the bank’s actions may have fallen short, leaving customers vulnerable to substantial financial losses. As technology advances and scams become more sophisticated, the question arises: should banks not only enhance their security measures, but also be held more accountable for the repercussions of fraudulent activities? Striking a balance between customer autonomy and robust protection mechanisms is crucial, prompting a broader discussion on how financial institutions can better shield their clientele in an evolving landscape of cyber threats.
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