By Dean Seal


The attorney general of New York has filed a lawsuit accusing Citibank of having poor online banking security and failing to protect customers from fraud.

Letitia James' office alleged Tuesday that Citibank fails to adequately respond to red flags that pop up in its customers' accounts, including scammers who use unrecognized devices, access accounts from new locations or change banking credentials. As a result, New Yorkers have lost millions of dollars to unauthorized account takeovers and wire transfers, the office said.

The bank also misleads account holders about their rights after their accounts have been hacked and their funds have been stolen, and illegally denies reimbursement to fraud victims, according to the complaint.

Citibank responded in a statement that it follows all laws and regulations related to wire transfers. It also said that banks aren't required to make customers whole when those customers follow criminals' instructions and the banks see no indication that the customer is being deceived.

"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 statement said.

James' office is seeking to have Citibank pay back defrauded New Yorkers, pay fines and enhance its anti-fraud defenses.


Write to Dean Seal at dean.seal@wsj.com


(END) Dow Jones Newswires

01-30-24 1045ET